Full Range Liquidity is Safer
Last updated
Last updated
Akronswap 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, especially when prices are volatile.
Decentralization is more about state-preserving and less bout state-changing. Full range passive liquidity requires far less state-changing actions compared to concentrated active liquidity for the ecosystem to keep going.
In a concentrated liquidity AMM, passive LPs 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