Thread by @bubee82

Trader Joe Liquidity Book - A Beginner's Guide Part 2

In this thread, we will be deploying your first position, using the 'spot' strategy.

Let's get to it! 🧵

https://twitter.com/bubee82/status/1637577432541671427

We will try the new $ARB / $USDC pool so have these tokens ready or follow the guide and apply accordingly.

Locate the pool: rb.gy/naavcw

➡️Head to the "Add Liquidity" section.
➡️Spot strategy is selected by default.
➡️Add 100 $ARB and 124 $USDC

In this example, we'll go with a 50/50 ratio but you can use any amount of both tokens to enter a position!

From here, you have two options:

1⃣Price Range
2⃣Bin radius

Let's start with #2.

Bin Radius will deploy your capital around the target price that you can set manually.

Let's set up and deploy the position:

➡️100 $ARB + 120 $USDC (price moved)
➡️Target price (centre): $1.20
➡️6 bins for $USDC
➡️6 bins for $ARB
➡️Price range covered: $1.13-$1.28

You're now set. As long as the price of $ARB remains in your range, you'll be earning fees.

Let's try #1 (Price Range).

This gives you more freedom and control over your capital.

In this example, I chose the price range to be $1.15-$1.25 which will deploy 9 bins in total.

Use the slider to set the range or you can manually input the price you want.

Congratulations!

You have now deployed your first position in the #LiquidityBook.

Few more things to wrap up:

The active bin

✅is the current price;
✅is where the swaps occur;
✅is the only bin that earns you fees;
✅contains both tokens

A bin

✅is a fungible token (FT);
✅is a "mini" liquidity pool;
✅covers one specific price point (i.e. $1.2189124);

Upon deployment or withdrawal, you will see NFTs mentioned in your wallet. As mentioned above, those are FTs and each bin is an FT.

How to be a successful market maker:

✅keep your liquidity in range at all times;
✅keep as much as you can in the ACTIVE bin;
✅keep it there as long as you can;
✅avoid using assets you want to hodl;
✅focus on the $ value and the ROI;
✅practice patience;
✅use charts;

Managing concentrated liquidity and operating the Liquidity Book is not easy and it's a fairly active job.

It requires constant monitoring of your position, re-evaluation, and forming strategies.

There isn't "THE" strategy.

Markets change. Sentiment changes. You must adapt.

That's all for now.

Next time, we'll discuss:

✅The Rewards Program
✅Single-sided deployment
✅Strategies for certain scenarios

Until then: practice, practice, and practice some more 📘

Note:

You will need to approve the tokens before the deployment of your position. You can approve just once or permanently.

You will also need to approve before the first withdrawal.