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A few typical use cases to demonstrate how to implement market making strategies through Arrakis V2.
The V2 infrastructure is extremely versatile, and virtually any strategy can be implemented on it. The example use cases below are only to suggest some ideas of what is possible. Feel free to contact us in our discord for any inquiries or comments.
For a pair of pegged assets, in order to allow for large sized trades, close to the peg, a large portion of the liquidity is in the 0.01% fee tier. In order to hedge liquidity providers’ risks, further away from the peg, the liquidity is automatically provided in the 0.05% and 0.3% fee tier.
Meanwhile, there can still be a good amount of sidelined assets inside the vault, which at any point of volume or volatility can be injected into the market as extra liquidity.
Conversely, on a volatile pair, a liquidity distribution can be set up similarly to a centralized limit order book, where further away from the current price, the liquidity is deeper and deeper due to the larger spread. When the price moves, these LP positions also move. If volumes increase, more liquidity can be injected into the pool.