Fig 3 - Alpha Pro deposits liquidity into 3 range orders on V3: a Full-Range order to guarantee tokens will be tradable, a Base-Order to concentrate liquidity, and a Limit-Order to minimise IL. By changing the Strategy Parameters (ie B, L, % liquidity in Full-Range, and rebalancing frequency), projects can choose how tradable they want their tokens to be when prices are volatile, how much liquidity to concentrate, and how much IL protection to offer LPs. After choosing the parameters, the vault can keep the spot price within the middle of the ranges when the price is volatile, as demonstrated by Alpha Vault over 8 months of continuous operation.
Alpha Pro works by combining Passive Rebalancing (V3 style LP) and Full-Range (V2 style LP) into a single vault. Passive Rebalancing is used to concentrate liquidity, increase capital efficiency, and minimise IL; and Full-Range ensures the tokens will always be tradable.
Therefore, Alpha Pro can achieve better capital efficiency than V2, and guarantee projects’ tokens are tradable in all market conditions.
When deploying their own vault using Alpha Pro, projects will need to choose the Strategy Parameters, depending on the balance they wish to achieve between capital efficiency and worst case liquidity.
After choosing the parameters, the vault will run by itself, and there is no need for further intervention unless projects wish to update the parameters. Alpha Vault’s track record shows how the vault can automatically rebalance to keep the market price within range:
Fig 4 - Alpha Vault is an example of a vault that can be build using Alpha Pro. On-chain data shows that over 8 months, the vault rebalanced itself automatically to keep the market price (red line) within the middle of the V3 ranges (blue region).