Strategy Modes
Pre-configured algorithmic strategies for automated liquidity management. Each mode optimizes for different goals, risk profiles, and market conditions.
At a Glance
- Four core modes: Conservative, Balanced, Aggressive, Dynamic
- Each mode uses different Liquidity Zone widths and rebalancing rules
- Modes adapt to pool characteristics automatically
- Switch modes anytime without withdrawing liquidity
- All modes optimize for net return after gas costs
- Backtesting available for all modes
Mode Comparison
| Feature | Conservative | Balanced | Aggressive | Dynamic |
|---|---|---|---|---|
| Zone Width | ±20-30% | ±10-15% | ±3-7% | Variable |
| Rebalance Freq | Low | Medium | High | Adaptive |
| Active Time | 90-95% | 80-90% | 60-80% | 75-90% |
| Capital Efficiency | 3-5x | 5-8x | 10-15x | 6-12x |
| Gas Costs | Lowest | Moderate | Higher | Moderate |
| Complexity | Simple | Moderate | High | Highest |
| Best For | Passive | Most Users | Active | Advanced |
Conservative Mode
Overview
Maximize position active time with minimal rebalancing. Prioritizes stability over maximum efficiency.
Characteristics
Wide Zones: ±20-30% from current price.
Infrequent Rebalancing: Only when price approaches zone boundaries (within 10% of edge).
Low Gas: Minimal rebalancing costs due to low frequency.
Predictable: Consistent earnings with few surprises.
How It Works
Algorithm maintains wide zones that rarely need adjustment.
Rebalancing Rules
Trigger: Price within 10% of zone boundary.
Action: Remove liquidity, create new position centered on current price with same width.
Threshold: Only rebalance if expected fee improvement > $5.
Cooldown: Minimum 12 hours between rebalances.
Ideal Conditions
Volatile Markets: Wide zones stay active through price swings.
Low Volume Pools: Rare rebalancing keeps gas costs low relative to fees.
Passive Investors: Set-and-forget approach.
Large Positions: Wide zones reduce IL compared to narrow zones.
Expected Performance
Pool: ETH/USDC (0.3% fee)
Volume: $5M daily
Position: $10,000
Zone Width: ±25% ($1,500 - $2,500 for $2,000 ETH)
Active Time: 95%
Rebalances: 1-2 per month
Gas Costs: $0.02 per month
Monthly Fees: $150
Net APR: ~18%
Customization
Adjustable parameters:
Zone Width: 15% to 40% (default: 25%)
Rebalance Distance: 5% to 15% from edge (default: 10%)
Minimum Benefit: $2 to $20 (default: $5)
Balanced Mode
Overview
Optimize capital efficiency while maintaining reasonable active time. Best all-around strategy for most users.
Characteristics
Medium Zones: ±10-15% from current price.
Regular Rebalancing: When price moves beyond zone or when optimization improves fees significantly.
Moderate Gas: Balanced cost-benefit ratio.
Flexible: Adapts to both stable and volatile periods.
How It Works
Balances responsiveness with cost efficiency.
Rebalancing Rules
Trigger 1: Price moves outside current zone.
Trigger 2: Alternative zone offers > 20% fee improvement.
Action: Calculate optimal zone based on recent volatility and volume distribution.
Threshold: Expected fee improvement > $2 after gas costs.
Cooldown: Minimum 1 hour between rebalances.
Ideal Conditions
Standard Markets: Normal volatility and volume.
Popular Pairs: ETH/USDC, WBTC/ETH, etc.
Medium Capital: $1,000 - $100,000 positions.
Most Users: Default choice for typical LPs.
Expected Performance
Pool: ETH/USDC (0.3% fee)
Volume: $5M daily
Position: $10,000
Zone Width: ±12% ($1,760 - $2,240 for $2,000 ETH)
Active Time: 85%
Rebalances: 8-12 per month
Gas Costs: $0.10 per month
Monthly Fees: $220
Net APR: ~26%
Customization
Adjustable parameters:
Zone Width: 8% to 20% (default: 12%)
Fee Improvement Threshold: 10% to 50% (default: 20%)
Minimum Benefit: $1 to $10 (default: $2)
Volatility Lookback: 1-7 days (default: 3 days)
Aggressive Mode
Overview
Maximize capital efficiency through narrow zones and frequent rebalancing. Highest potential returns with active management.
Characteristics
Narrow Zones: ±3-7% from current price.
Frequent Rebalancing: Multiple times per day when needed.
Higher Gas: More rebalancing operations.
High Efficiency: Capital works hardest when in range.
How It Works
Constantly optimizes for maximum fee capture.
Rebalancing Rules
Trigger 1: Price moves > 2% from zone center.
Trigger 2: Alternative zone offers > 10% fee improvement.
Trigger 3: Volatility change > 30%.
Action: Calculate tightest viable zone based on recent price action and gas costs.
Threshold: Expected benefit > $0.50 after gas.
Cooldown: Minimum 30 minutes between rebalances.
Max Frequency: 24 rebalances per day.
Ideal Conditions
Stable Markets: Low volatility enables narrow zones to stay active.
High Volume Pools: Frequent trades maximize narrow zone benefits.
Active Managers: Users comfortable with frequent adjustments.
Medium Positions: $5,000 - $50,000 where gas is negligible.
Expected Performance
Pool: ETH/USDC (0.3% fee)
Volume: $5M daily
Position: $10,000
Zone Width: ±5% ($1,900 - $2,100 for $2,000 ETH)
Active Time: 70%
Rebalances: 30-50 per month
Gas Costs: $0.50 per month
Monthly Fees: $350 (when active)
Net APR: ~42%
Higher returns but requires favorable conditions.
Customization
Adjustable parameters:
Zone Width: 2% to 10% (default: 5%)
Rebalance Distance: 1% to 5% (default: 2%)
Fee Improvement Threshold: 5% to 25% (default: 10%)
Max Daily Rebalances: 10 to 48 (default: 24)
Risks
Higher IL: Narrow zones suffer more from price divergence.
Inactive Periods: Position goes out of range more frequently.
Gas Costs: More rebalances means higher cumulative gas.
Market Sensitivity: Poor performance in high volatility.
Dynamic Mode
Overview
Adaptive strategy that adjusts zone width based on market volatility. Combines benefits of all other modes by switching between them automatically.
Characteristics
Variable Zones: 3% to 30% depending on volatility.
Intelligent Rebalancing: Adapts frequency to market conditions.
Market Aware: Expands during volatility, contracts during stability.
Complex: Most sophisticated algorithm.
How It Works
Algorithm automatically selects optimal mode for current conditions.
Rebalancing Rules
Volatility Calculation: Rolling 24-hour standard deviation of prices.
Mode Selection:
- High volatility (> 5% daily): Conservative mode
- Medium volatility (2-5% daily): Balanced mode
- Low volatility (< 2% daily): Aggressive mode
Transition: Gradual zone width adjustment over 1 hour.
Threshold: Mode-specific rebalancing rules apply.
Ideal Conditions
Changing Markets: Transitions between stable and volatile periods.
Uncertain Conditions: When you don't know which mode to use.
Experienced Users: Understand tradeoffs of different approaches.
Medium-Large Positions: $10,000+ where optimization matters.
Expected Performance
Pool: ETH/USDC (0.3% fee)
Volume: $5M daily
Position: $10,000
Zone Width: Variable (5% to 25%)
Active Time: 82%
Rebalances: 15-25 per month
Gas Costs: $0.25 per month
Monthly Fees: $240
Net APR: ~29%
Adapts performance to market conditions.
Customization
Adjustable parameters:
Volatility Lookback: 12-48 hours (default: 24 hours)
Volatility Thresholds: Custom definitions of high/medium/low
Transition Speed: How quickly zones adjust (default: 1 hour)
Min/Max Zone Width: Bounds for adaptive range
Switching Modes
How to Switch
- Open position in CLM
- Click "Change Strategy Mode"
- Select new mode
- Review expected changes
- Confirm switch
What Happens
Immediate Rebalance: Position rebalances to match new mode's zone width.
Parameter Update: New rebalancing rules apply going forward.
Gas Cost: Single rebalance transaction (~ $0.01).
History: Performance tracking continues across mode change.
When to Switch
Conservative → Balanced: Market stabilizing, want more efficiency.
Balanced → Aggressive: Low volatility period, maximize returns.
Aggressive → Conservative: Volatility increasing, preserve capital.
Any → Dynamic: Uncertain conditions, let algorithm decide.
Performance Comparison
Backtest results (ETH/USDC, Q4 2024):
Manual Management:
Total Fees: $1,200
Gas Costs: $150 (Ethereum) / $0.50 (MegaETH)
Net: $1,050 (Ethereum) / $1,199.50 (MegaETH)
Conservative Mode:
Total Fees: $1,400
Gas Costs: $0.02
Net: $1,399.98
Improvement: +33% (Ethereum), +17% (MegaETH)
Balanced Mode:
Total Fees: $1,850
Gas Costs: $0.10
Net: $1,849.90
Improvement: +76% (Ethereum), +54% (MegaETH)
Aggressive Mode (stable period):
Total Fees: $2,400
Gas Costs: $0.50
Net: $2,399.50
Improvement: +129% (Ethereum), +100% (MegaETH)
Dynamic Mode:
Total Fees: $2,100
Gas Costs: $0.25
Net: $2,099.75
Improvement: +100% (Ethereum), +75% (MegaETH)
Performance varies by market conditions.
FAQ
Can I create custom modes?
Not yet. Custom strategies coming in future release.
Which mode should I start with?
Balanced mode for most users. Conservative if risk-averse. Aggressive if experienced.
Do modes work on all pools?
Yes, but performance varies. Check backtests for specific pools.
Can I pause a strategy?
Yes. Position remains active but stops rebalancing. Resume anytime.
What if a mode performs poorly?
Switch modes or exit strategy. No lock-in.
Are there fees to use Strategy Modes?
No protocol fees. Only gas costs for rebalancing.
Next Steps
Learn more about strategies:
- Automated Rebalancing - Technical details
- Range Optimization - Zone calculation algorithms
- Performance Tracking - Monitor returns
Choose your approach.