DeFi LPs Drowning in Position Management
Liquidity providers and traders are frustrated by the constant need to monitor and adjust their positions, leading to reactive behavior, diminished returns, and inefficient capital allocation. They desire strategies and tools that allow for more passive management and reduce the burden of constant intervention. The core pain is the inefficiency and stress of actively managing liquidity pools.
SOURCES (60)
“That's the trade-off I'd watch too. A hook has to earn its extra attack surface through better execution, more efficient liquidity, or a market the base pool can't serve; a higher headline fee isn't enough once you account for adverse selection, impermanent loss, gas, admin risk, and external dependencies. I'd expect durable liquidity to concentrate around simple, well-reviewed hooks, while complex designs survive only where they capture genuinely specialized flow.”
I might be interested in something like this in the future.
“Completely agree. Relying strictly on external teams was creating too much friction for core upgrades, so stepping in as an active operator makes sense.”
“No, if the IV is low when you buy the options at the beginning then your hedging cost is fixed there and you don't need to hedge anymore.”
“Same as options too right??? Their prices ALWAYS increase with volatility. With hedging via simply shorting perps, the average funding fee is constant”
“Two benefits actually. First, once you have the option portfolio, you don't have to dynamically hedge your IL. Second, your hedging cost will be fixed. With perps, the hedging cost will be high if the market is volatile.”
“The point about predictable incentives and reliable APIs is spot on, good liquidity usually needs both sustainable rewards and a smooth experience for market makers.”
“I have been doing some DD for the past few days and I might have found a couple of interesting things. Still digging into it though, so hopefully it turns out well. If it does, I willl share everything in a post here on /defi”
“I am still maxing Pendle PT's as they are the best fixed yields in DeFi. Im also trying out their new Arbitrage tool on Boros. So I dont get tunnel visioned, what are you guys up to? Any other Pendle users? submitted by /u/Chads_ [link] [comments]”
“Five ways to slice the same trade, and they still all move together when NVDA sneezes. The quarterly dutch auction rebalance is interesting though, most of these basket products just drift until someone manually intervenes the permissionless mint/redeem part matters more than people give it credit for. if the arb loop actually works in practice and not just in a whitepaper, that NAV anchor is the whole product. everything else is marketing curious how the POWER basket handles rebalancing when ut”
“Saw some past reddit posts asking the same thing, but those were around a year ago so I wanted to get some updated opinions. Some things I have found from other opinions: The portfolio trades a lot. ETFs, Index Funds, and individual stocks. Many say they do this mostly to benefit from the kickback Robinhood recieves they receive on trades. 0.25% yearly fee, plus the expense ratio of any ETF that it invests in. Some have complained that their portfolio isnt aggressive enough, which may come down”
“I tried to do something like this a year or two ago and had a hard time trying to get it all worked out and ended up just moving on. It's a great idea, wishing you much success!”
“per 4h changes what i told you above, and not in your favour. 0.2% every four hours is six stamps a day, so 1.2% daily, $432 on $36k notional. the $790 is about 1.8 days of carry at exactly the rate that was on your screen so the check is $790 divided by $72, which is eleven stamps. count how many 4h boundaries the position was actually open across. eleven and nothing was overcharged, the halt just happened to sit inside it. two or three and you've got a real discrepancy plus the number to h”
“Hooks are basically just custom logic plugins, so the real question is whether the fees justify the complexity they add - most of them feel like solutions looking for problems tbh. I'm mostly watching to see if liquidity actually fragments or if a few well-audited, simple hooks dominate like Uniswap's native stuff.”
“Right now I’m just in the Exponent/Loopscale ONRE growth vault. Around 10-11 APY right now with the underlying being mostly ONYC. Also some looping and PT exposure. I’m also doing it to farm Loopscale and OnRe points at the same time. Not sure if there will be airdrops, but I like the yield enough to give it a shot. I’m super late and only using 0.20% of my port on this though. Will probably get pennies to dollars if there is one. Still warming up to DeFi and the idea of getting drained or hacke”
“I have long since been an advocate for CSPs, the strategy itself works great but the covered calls when assigned left money on the table and the calls themselves had such low IV they hardly made up for the cost of assignment and capital tie up I switched to a pure volatility trading strategy, usually around earnings of major companies. I look for IV spikes into earnings as far out in term as possible, and as wide as possible, sometimes 6 months out and will sell as wide as I can a naked strangle”
“That Stellar parallel is exactly the distinction I was trying to draw. I wouldn’t call any hook safe to LP blind based on this autopsy, since it wasn’t an individual-hook audit or whitelist. A hookless or minimally hooked pool reduces the custom-code surface, but I’d still review the token, PoolKey, router or integration, liquidity, and fee settings. Your custom-accounting or custom-curve heuristic is a good trigger for deeper review. A hook can still add material risk without changing the invar”
“I use Beefy to find opportunities but I then do some manual math to make sure the numbers check out. Sometimes their numbers aren't very reliable”
“What is the best pool, vault or yield source you have found lately? Doesnt have to be some crazy 100% APY farm. Iim more interested in stuff that's actually sustainable and has been performing consistently. Share your hidden gems. You might get a bit diluted by everyone jumping in, but sharing is caring 😂 Bonus points if you have actually been using it for a while and can share your experience. submitted by /u/terminallyonchain [link] [comments]”
“You wouldn’t be able to get that realistically. With IR you are probably getting way less than that on your LP. Most btc yield struggles to break 1%”
“I usually hedge my LP with option portfolio. But the thing is the trading fee has to cover the cost of the option portfolio.”
“Glad you liked it! and you're def killing it. it's so hard to show the actual gains in LP.”
“LPing is a net loss for most LPs, you get picked off by arbitrage bots and smart market makers. I’d say there’s very few sources of true yield on BTC. You could try Axal but you can’t expect truly high yield because btc is rarely borrowed. If borrowed it’s borrowed as a short position.”
“thanks! how about the 30 day average that the ui shows in uniswap? Finding it hard to use the revert.finance”
“I keep seeing stuff about hyperevm. Great returns you're getting there need to take a closer look at this”
“64 cents to rent a dollar is going in my reply to the next kol package pitch. Ours went the same way, stopped screenshotting the follower count for the deck around March. Two of us on emissions then.”
“The apr you see is basically meaningless on its own, whats matters is fee apr minus impermanent loss, and the ui never shows the IL. on a v3 ETH/USDC range you earn while price stays in range and nothing when it leaves, and if ETH runs you just end up holding more USDC and less ETH. for actual history check revert finance, it models fees vs IL on v3 instead of the fantasy apr. and if youre scared of losing a big chunk, a volatile pair isnt it, stablecoin pools maybe better”
“Ive been lping with BTC pairs for a few months and so far the returns have been pretty good. But Im starting to look for something more stable where Im not taking as much impermanent loss/price exposure. What are you guys using for BTC yield these days? Ideally something relatively low risk. Please spare me the warnings about wrappers and smart contract risks :))) submitted by /u/terminallyonchain [link] [comments]”
“in the day-to-day "I want to swap right now" sense, yes, each basket needs its own market and trading convenience depends on each DTF building its own onchain liquidity, same as any token”
“Wow love this post. Wish we actually had more of these. I think the issue with using KOLs is that they'll only bring "get rich quick" members that will move on the next protocol as soon as if offers something better.. The only thing that I've personally seen that works is offering a ridiculously high yield. Also, and this one is 100% right, was comparing yourself to others and simply offering more than what your competitors were offering. The project even did a full chart and e”
“the fee tier decides how much flow you see in the first place. when we route a swap we walk the venues and pick on effective price after fees, so a 0.3% pool only gets the order when the cheaper tier is too thin to fill it, which is part of why the apr you're looking at swings around so much. $3.50 on $850 over 5 days annualises to somewhere near 30% before eth moves at all, so it's worth pulling what the 0.05% pool on the same pair paid over those same days before you park savings in ei”
Not sure if you're interested but I usually hedge my LPs with options.
“Lo mas conveniente es hacer Pool de líquidez cuando el precio está abajo, asi compensas el IL, lo mejor es hacerlo con criptos que si te quedas 100% con una de ellas, no te deja la sensación de haber perdido, por ejemplo en una de SOL/BTC, si me quedo 100% SOL o 100% BTC, me daría igual.”
“youre gonna want to check the impermanent loss risk before putting big savings in there, that can eat your gains real fast if the pair moves too much the 30 day lookback is good advice but also look at the pools volume not just the APR, high APR with low volume means the fees are coming from few trades and it can dry up overnight maybe start with a smaller chunk and see how it feels for a month or two, the hacking fear is real so spread across few wallets maybe”
“This week I tried to move past low-yield stablecoin farming and find something with actual sustainable returns, not just a high APY heading toward a token dump. I spent days sifting through dead liquidity pools, over-diluted farming setups, and restaking programs that felt more like busywork than investing. I was ready to give up and just sit in cash, until I started looking into DeFi protocols with real-world trading volume behind them”
“I’d separate the trade thesis from the exit. ADL can make the result look better than something actually repeatable. That’s one reason I like Moon fixed-wager setup, the downside is defined upfront”
“Worth separating two things if you're comparing yields: a published APR and a points programme are not the same kind of number. An APR you can check. A points programme often can't be checked at all. Pacifica's own docs say the formula is "dynamic and opaque by design, updated weekly as usage evolves" — they publish the weekly pool (10 million points) but not what a point is worth, and there's no announced token, date or conversion ratio behind it. That's not a crit”
“This is why I like platforms that make the downside obvious upfront. Moon caps the loss at the amount you wager, so at least you know the exact worst case before entering”
“Do you use any kind of hedge or double position on the same pool with different ranges? I have created some automated bot for DeFi too, with perp hedge and a lot of strategies but it’s really hard to have constant profits.”
“My full time job is to run liquidity pool bots. If done correctly LP’s can make a lot of money. If done with little thought you will most likely lose. I specialise in emission pools only, but a few things I know would spill over to swap fees pools. A good strategy would be to jump between fee and emission pools through the week. On weekdays stay in fee pools and then move to emission pools (like aerodrome on weekends). Have wider ranges on weekdays and tighten over the weekends. To not lock IL y”
“Before looking for returns from trading fee, I'd recommend understanding the impermanent loss first. In case of price swings, huge impermanent loss can wipe out your trading fees earned and you end up in loss.”
“I guess choosing the most stable pairs which has stood for a couple of years would be the best bet?”
“Dont just look at the current APR. I usually check as many pools as possible and look at least 30 days back, preferably longer. You want to see whether the returns are actually consistent- Ive been lping UBTC/WHYPE on hyperevm for over 3 months and the returns have been pretty insane so far.”
“revert.finance let's you find profitable positions. Check "top positions" and filter on the platform and tokens you are interested in. Take position age and size into consideration.”
“metrix.finance for history/app or just coingecko and find a decent range manually. make your own spreadsheet. i track last yield date checked, and yield then, today date, today total yield, and other things and formulas can give you daily $ yield generated, realized apr. dont rely on the dex apr. i like testing like $30 on different fee tiers and ranges then scale into what holds well over time. treat it like a business. not financial advice just what i do”