Channel Multiplier Strategy

Basic Overview

The Channel Multiplier Strategy is the cornerstone of the Quick Mode feature, designed for simplicity and efficiency. It requires only a single input parameter from users: the desired percentage range for market making, both above and below the current price. This strategy adopts a single liquidity provider (LP) position, aligning with traditional manual LP approaches on Automated Market Makers (AMMs).

In most cases we recommend using the Classic Reblance Strategy for any advanced configuration.

Ideal Applications

Blus Chips token and Liqyuid Staked Token

Advanced Description and Uses

Strategy Details

The Channel Multiplier Strategy operates by:

1. Using a single parameter input to define the percentage range for bid and ask prices

2. Creating a single LP position based on this range

3. Offering broad range flexibility to accommodate various market conditions

4. Enabling rapid deployment for swift market adaptation or expansion

Key Features

• Single Parameter Input

• Broad Range Flexibility (1% to 75% or more)

• Rapid Deployment (< 30 seconds)

• Universal Applicability

This strategy has rebalance trigger support and liquidity curve support.

Strategic Advantages

• Ease of Use

• Versatility Across Markets

• Optimal for Initial Pool Formation

• Minimal Setup Time and Effort

Technical Explanation

The Channel Multiplier Strategy simplifies the process of liquidity provision while maintaining effectiveness across various market conditions.

Core Mechanics

Users define a single percentage value that determines the range above and below the current price for liquidity provision. Based on this percentage, a single liquidity provision (LP) position is created, which spans symmetrically around the current market price. The range for this position is calculated using the formula: the lower bound is the current price multiplied by (1 - the input percentage), and the upper bound is the current price multiplied by (1 + the input percentage). The system supports channel widths from 1% to 75%, with the flexibility to adapt to even larger values depending on specific market requirements.

Implementation Considerations

• Ideal for markets without extensive historical data

• May require more frequent rebalancing in highly volatile markets

• Simplicity may come at the cost of fine-tuned optimization in some scenarios

• Regular monitoring of market conditions is advised to ensure the chosen range remains appropriate

Comparison to Classic Rebalance Strategy

• Simplified version of the Classic Rebalance Strategy

• Only offers the price percentage option for position width

• Lacks the multiple position types and complex rebalancing mechanics of the Classic Rebalance Strategy

Use Case Scenarios

1. New Token Launch:

   • Quickly establish liquidity without historical data

   • Provide immediate market presence and tradability

2. AMM Expansion:

   • Rapidly deploy new trading pairs or markets

   • Enable BD teams to respond quickly to market opportunities

3. DeFi Onboarding:

   • Allow new users to participate in liquidity provision with minimal complexity

   • Serve as an educational tool for understanding basic market-making concepts

4. Emergency Liquidity Provision:

   • Quickly restore liquidity in case of sudden market events or liquidity crises

By offering a streamlined approach to liquidity provision, the Channel Multiplier Strategy enables rapid market making across a wide range of scenarios, making it an invaluable tool for both established AMMs and newcomers to the DeFi space.