🚶♂️Step-By-Step
Last updated
Last updated
These are the basic steps that generally apply to opening any Itos AMM position.
Select a market making price range to earn fees within. We're ultimately a Constant Product AMM and users earn fees in the same way.
When choosing, we estimate your APR and your breakeven price, the price the token has to stay above to remain profitable given your APR for the year.
We give tick level data for the APRs in your price range so you can inspect exactly which ticks are earning how much.
Input your desired deposit size in either of the two token fields, and we'll fill in the other according to the deposit ratio. For information on why there is a deposit ratio, see Automated Market Making.
The determines your deposit size, which is the value of your position, called principal value. Now the graph displays the risk to your principal value. Some have called this Impermanent Loss or Divergence Loss. All Automated Market Making LPs are exposed to this risk, regardless of whether they show you or not.
This concludes the Liquidity Provisioning half. Now we use convexity to mitigate these risks and protect our principal.
Some of the strategies allow for leverage which is your market exposure relative to your deposit size. For example, 2x leverage will almost double your yield ("almost" because of borrow costs) or vol-taking with 2x will double any divergence gains.
Not every strategy has a hedge, but for the ones that do you can choose an Automatic or Manual hedge.
Automatic: By default, there is an automatic hedge which places Liquidity Takers slightly outside your market making range. This way, when the price goes out of your market making range and you stop earning fees, you also stop losing principal value (with respect to IL or RL or whatever you choose).
Manual: More advanced users can choose their own max loss percent. This allows them to optimize the hedging costs of the Liquidity Takers which still achieving the risk bounds they'd like.
