Why Full Range Liquidity?
Akronswap only implements full range liquidity for the following reasons:
Full range liquidity is better for passive LPs than concentrated liquidity in the long-term in terms of APY per unit of risk.
Decentralization is more about state-preserving and less bout state-changing. Full range (passive) liquidity liquidity requires far less state-changing actions compared to concentrated (active) liquidity for maintenance.
In a concentrated liquidity AMM, Passive LPs almost always lose potential earnings to active LPs on top of losing to arbitrageurs, and therefore passive LPs are incentivized to become active LPs. This incentive leads to delegation of liquidity management to a few centralized players.
| Category | Full Range Liquidity | Concentrated Liquidity |
|---|---|---|
Short-term APY | Low | Very High |
Long-term APY | High | Low |
Impermanent loss | Low | Very High |
Loss-versus-rebalancing | Low | High |
Frequency of state-changing actions to be within fee-earning range | Never | High |
Benefits to active LPs | Low | High |
Benefits to passive LPs | High | Low |
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