Osmosis has announced the launch of Supercharged Liquidity, highlighting that it is one of the biggest upgrades to its native decentralized exchange, also referred to as DEX. There are a bunch of features and strategies that Osmosis Supercharged Liquidity brings to the table. First things first, the objective is to revolutionize decentralized market-making through capital efficiency.
DEX can make it difficult, but Osmosis has been able to crack that code. It basically enables Liquidity providers, or LPs, to choose their preferred price range. This is in contrast to the model where they have to stick to the full range per the traditional means. The flexibility suffices the fact that there is the presence of dynamic range for them.
Not just the decentralized exchange arm of Osmosis, but users are also likely to gain access to the benefit of enhanced capital efficiency.
Choosing the preferred price range is backed by the mechanism of opting to concentrate Liquidity around the spot price that is prevailing in the market. This, again, depends on where the point precisely lies at the moment. Users can expect to make modifications based on their needs or estimates. Users can capture the fees that it generates, which was previously not the facility under the full range model.
Having talked about the key feature, one must note that the list goes on based on one’s willingness to explore Osmosis Supercharged Liquidity. Meaning there are other features that could come in handy on top of the key feature of choosing the preferred price range.
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There are two strategies that users can pick: Passive Strategy and Aggressive Strategy. Obviously, to put it in words, Passive Strategy adopts a conservative approach while Aggressive Strategy carries a rather opposite approach. Bringing clarity is the price range and the point where earnings will fall. In a Passive Strategy, users can distribute less Liquidity without worrying about earnings falling outside the range. This is not the case in Aggressive Strategy.
Also, Passive Strategy results in less fee earned over time, while Aggressive Strategy can fetch better financials.
It is purely based on one’s choice and willingness to take the risk. Passive Strategy works better for users seeking to play safe. Aggressive Strategy is majorly for those who don’t mind shedding a few portions of their portfolio under the radar of losing it in the worst scenario.
Osmosis Supercharged Liquidity functions like a traditional AMM. Meaning prices make a movement, and so do the assets. The movement is observed at a time when a user’s position falls out of the range. That is when they see a hundred percent of other assets to their name until the price makes a re-entry into the range.
Liquidity is dynamic, and traders are at liberty to deploy the Strategy they find more meaningful. The free market comes with the potential of re-working things when benefits are not really flowing in the direction of a trader.
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Overall, Osmosis Supercharged Liquidity enables users to capitalize on the market movement while empowering them to leverage the best possible Strategy per their preference.
