Gamma Strategies
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Gamma Strategies

Gamma Strategies Officially Launches on Arbitrum

We are proud to announce that Gamma Strategies is finally live on Arbitrum! Arbitrum has rocketed its way to become the fourth largest ecosystem overall and the largest L2 ecosystem by TVL. As such, we made it a priority to manage a wide variety of pairs here, which include the project tokens of some of the top protocols in the ecosystem.

In tandem with this Arbitrum launch, we will be launching new strategies and descriptions on our web app, along with an array of structured LP products for both risk tolerant and risk averse LPs.

New Strategies & Descriptions

Structured LP products are markedly absent from DeFi today. By offering both wide and narrow dynamic range strategies, we are catering to those with different risk tolerances and views on volatility. The act of liquidity providing itself is a position that is short volatility, and narrower ranges are accordingly more short volatility. Additionally, we are offering pegged price strategies which create tight liquidity bands around the net asset value of liquid staked derivatives which typically has the effect of maximizing fee revenue with minimal impermanent loss.

Dynamic Range — Wide / Narrow

So while both wide and narrow LP positions are automatically rebalanced when certain rebalance triggers are met (see illustrative example above), the wide positions will typically do better than narrow positions when volatility is high and worse when volatility is low.

Over the long run, the wider ranges will likely perform better than narrower ranges, but in the short run, when volatility is low, the narrow positions can far outperform their wider counterparts. Which strategy an LP provides depends on the LP’s risk tolerance and view on volatility. It can even be a mix of both positions!

Pegged Price

Liquidity is provided directly around the net asset value of a provided asset. For example, a wrapped, staked ETH derivative asset will be provided only within a fixed range around its net asset value. Even if the price were to go out of range, the liquidity ranges will only be rebalanced upon the NAV price touching the strategy reset bounds.

Based on our backtesting results, this strategy was profitable because we saved on impermanent loss by not providing liquidity when the market price deviates materially from the net asset value. By expecting the market price to eventually converge to net asset value allows for us to provide liquidity where the price is most likely to trade.

New Pairs

Our initial pairs for launch will include a wide array of high volume pairs across multiple fee tiers and strategies. We will be including the following pairs for deposits:

Dynamic Range — Wide/Narrow

  • WETH-USDC 0.3%
  • WETH-USDC 0.05%
  • WBTC-WETH 0.3%
  • WETH-LINK 0.3%
  • WETH-GMX 0.3%
  • MAGIC-WETH 1%

Stable Strategy

  • DAI-USDC 0.05%
  • USDT-USDC 0.05%

Pegged Price

  • wstETH-WETH 0.05%
  • wstETH-WETH 0.3%
  • rETH-WETH 0.05%

Arbitrum is one of the premier L2 scaling solutions for the Ethereum network that uses optimistic rollups. Most recently, it has released its Arbiturm Nitro upgrade which increases throughput and lowers fees. According to https://l2fees.info/, Arbitrum One has one of the lowest fees among L2 scaling solutions.

In the coming weeks, we look forward to launching more pairs and partnering with more protocols on Arbitrum! We also look forward to hearing your feedback on the new strategies and descriptions. Please reach out on discord if you have any questions!

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Gamma Strategies

An organization dedicated to researching and funding ‘Active LP’ strategies.