Fig 3 - Alpha Pro deposits liquidity into 3 range orders on Uniswap 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), liquidity managers can choose how tradable they want their tokens to be, how much liquidity to concentrate, and how much IL protection to offer. After choosing the parameters, the vault will chose ranges on behalf of the liquidity manager, as demonstrated by on-chain track records over 16+ months of continuous operation.
Alpha Pro works by combining Passive Rebalancing (Uniswap V3 style LP) and Full-Range (Uniswap 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 Uniswap V2
Guarantee projects’ tokens are tradable in all market conditions.
When creating their own vault using Alpha Pro, liquidity managers will need to set values* for the Strategy Parameters, depending on the balance they wish to achieve between capital efficiency and worst-case liquidity. After setting the values, the vault will automatically choses new ranges on behalf of the liquidity manager. The parameters' values can be changed at any time.
Alpha Vault’s track record shows a single set of values for the Strategy Parameters have correctly chosen over 1000 ranges since May 2021, without the liquidity manager having to chose a range themselves.
*default values will be provided for basic users so they don't need to set the values themselves.
Fig 4 - Alpha Vault is an example of a vault that can be build using Alpha Pro. On-chain data shows that over 14+ months, Alpha Pro kept the market price (red line) within the middle of the ranges (blue region) chosen by the vault.