Clip Finance
Clip Finance is an Active Capital Coordination Protocol that provides AI-powered active liquidity management. It optimizes liquidity ranges on decentralized exchanges to maximize fee earnings and minimize impermanent loss.
Clip Finance Strategies for Concentrated Liquidity Management
Clip Finance uses two main approaches:
1. Clip Tight
- Optimized for stablecoin pools
- Keeps the liquidity range very tight when pool assets are near parity
- Widens ranges when impermanent loss threat is evident due to asset price changes
- Maximizes capital efficiency and minimizes impermanent loss
2. Clip Dynamic
- Optimized for volatile asset pairs
- Creates a dynamic asymmetric range based on market conditions
- Aims to earn maximum fees while limiting the negative effect of impermanent loss
Clip Finance’s Range Adjustment Strategy
Their active liquidity management strategy has the following components:
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Pool Selection: Choosing or creating attractive liquidity pools that enable fee collection in attractive proportions relative to employed capital
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Volatility Analysis: Using volatility prediction models and machine learning for both short- and long-term market volatility predictions
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Range Optimization: Feeding volatility predictions to a custom algorithm to estimate optimal range width and adjustment timing
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Market Analysis: Using market sentiment measures, machine learning models, and technical analysis indicators to predict and react to market price trend changes
Market Considerations
Liquidity range selection depends on:
- Market trends (positive, negative, or range-bound)
- Volatility levels (high, medium, or low)
The general market regime estimations are based on longer-term trends and outlooks, whereas range and liquidity management models consider more short-term fluctuations.
For more detailed information, refer to their documentation.