What is a bin strategy?
A bin strategy is the distribution of your liquidity across the different price bins in a pool. When you provide liquidity to a pool, you can choose to distribute your liquidity across one or more bins, which represent different price ranges for the trading pair. Your choice of bin strategy will determine how your liquidity is allocated across these price ranges, and therefore how you earn trading fees and lending yield.Types of bin strategies
There are three types of bin strategies to choose from on Juncta:- Spot: The Spot strategy concentrates 100% of your liquidity in the active bin (representing the current market price) and the two bins on each side, totaling five bins. This distribution provides maximum capital efficiency and the highest potential for fee capture, but it also carries the highest exposure to impermanent loss. Spot is best suited for professional liquidity providers, market makers, or users employing adaptive mode strategies who are comfortable with higher risk for potentially higher rewards.
- Curve: Your liquidity is distributed across a curve of bins around the current market price. It typically covers about 20 bins in each direction, with allocation weight decaying as bins move further from the centre. This strategy is ideal if you want to earn trading fees while also providing some protection against impermanent loss.
- Bid-Ask: Your liquidity is split between the bid and ask sides of the order book. It places liquidity asymmetrically around the current market price, with more bins filled on one side than the other. This lets LPs express a directional view while still earning fees from trades on both sides of the book. For example, a provider who expects the token price to rise might allocate 70% of liquidity above the current price and 30% below. This strategy is ideal if you want to provide liquidity on both sides of the market and earn trading fees from both buy and sell orders.
Which bin strategy should I choose?
The best bin strategy for you will depend on your risk tolerance, market outlook, and investment goals. Here are some general guidelines to help you choose:- If you are a risk-tolerant liquidity provider who wants to maximize trading fee earnings, the Spot strategy may be the best choice for you.
- If you want to earn trading fees while also providing some protection against impermanent loss, the Curve strategy may be the best choice for you.
- If you want to provide liquidity on both sides of the market and earn trading fees from both buy and sell orders, the Bid-Ask strategy may be the best choice for you.