How To Profit From A Low-Vol Market Using UniBot

Diamond Protocol
Diamond Protocol
Published in
4 min readOct 11, 2022

Over the past month, the crypto market, particularly ETH, has gone through a period of low volatility.

Following the steep sell-off of ETH mid-September, ETH price has been hovering from $1250~ to $1400~ USD from September 20th to Oct 10th. This can be translated into roughly 7.5% of price movement centered at the mean price and represents a unique period of relative price stability in ETH’s history.

Periods of low price volatility pose a problem for crypto traders seeking alpha, as most common financial instruments in the crypto market, such as perpetual contracts and options, capitalizes on volatility. Stable prices make it difficult for crypto traders to profit in this market.

The effects of low price volatility are most evident in the fee performance for Uniswap v3 liquidity providers. Below we show data for 30-day trading volumes between USDC and ETH. As well as the fee APR of Uniswap V3’s most popular USDC/ETH 0.05% pair.

USDC/ETH 30-day trading volume

The trading volume between ETH and USDC has lowered significantly from late September to now. This compounded Uniswap V3’s ETH/USDC fee APR for the same date range.

Uniswap V3 — USDC/ETH 0.05% — 30-day fee APR (for 15% price range)

The average Fee APR over the past month is 98.569%, which includes the period of higher price volatility during mid-September due to hype over the ETH merge, which drove the price of ETH momentarily to $1800. The extended period of low volatility and volume emerged post-ETH-merge crash at late-September, evident from the low fee APRs beginning the start of October (shown above).

Uniswap V3 — USDC/ETH 0.05% — 10-day fee APR (for 15% price range)

When looking at only the past ten days, the average fee APR would only be 49.703%.

Diamond Unibot’s Fee Performance

Unibot is a leveraged liquidity provision platform where liquidity providers on Uniswap v3 can hedge their LP positions by borrowing and shorting volatile assets. If we take the same low volatility scenario above, our fee performance in the past 10-days can be calculated using the above data.

On Uniswap: 10-day average fee APR for the 15% range is 49.703%

→ With leverage from Unibot:

Taking everything into account, below is how a trader would fare on Unibot opening a similar position ten days ago, at a safer 15% range, with all three leveraged options on our platform. Note that strategy ROI considers the PnL from entering and exiting the position.

Unibot — USDC/ETH 0.05% — 10-day Performance (15% price range)

For periods of low trading volume hence low fees, many traders would compensate for this period of low volatility by constricting their price range to 5%, increasing their capital efficiency. Below we show the same 10-day fee APR for a 5% price range.

Uniswap V3 — USDC/ETH 0.05% — 10-day fee APR (for 5% price range)

The average fee APR for the past ten days, with a 5% range, is 148.17% on Uniswap. On Diamond Unibot, we helped traders increase the fee APR further. Assuming a trader that opened a 5% range LP position on Unibot instead of Uniswap 10 days ago, and utilized 3X leverage (net short position) on our platform, he would have earned

  1. 11.97% Fee ROI (436.9% Fee APR)
  2. 14.70% Total ROI (533.31% APR) — taking into account profits from the short

The data from this article is extracted from our platform for our Unibot community’s interest and does not constitute any investment or trading advice. The Diamond Team continues to work hard on improving our leveraged liquidity provision platform and enjoys discussing strategies and feedback on our official discord. We love to share more of our market observations and data.

You can only use Unibot after joining our exclusive whitelist. To do so, drop your address in our #unbot channel in our discord at: https://discord.gg/PGGdPaecVt

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Diamond Protocol
Diamond Protocol

Diamond is a modular vault protocol where DeFi strategists can build and deploy on-chain strategies without ever writing a line of code. https://discord.gg/PcC8