shitpostoor ◯ community manager ◯ kol ◯ creator 🍀
trenches
Joined June 2023
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Cipher 🍀 retweeted
Imagine you’re standing right in the middle of a bustling, narrow stone bridge connecting two massive, chaotic trading islands.
Thousands of merchants are running back and forth in a frantic rush, shouting over each other, desperately trying to swap their assets before the tide turns. The air is thick with tension, noise, and unpredictability.
Most liquidity providers step onto that exact bridge clutching all their cash in one hand, planting themselves in one single spot, and praying to the crypto gods that traders walk right up to their exact doorstep.Then, the market moves.
A sudden flash crash hits, or a massive green candle violently spikes.Traffic shifts away from you in a heartbeat. Your capital goes completely out of range, sitting dead and useless, while the brutal wave of impermanent loss sweeps in to eat your lunch.
You’re left standing on an empty bridge holding an empty bag.There has to be a smarter way to survive the chaos.
Let’s talk about Liquidity Ladder @liquidityladder and how building a 50-step staircase changes the game on BSC, Base, and RH networks.
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yall suck dicks for web3 gigs?? 😳
i have gigs if you want tho 🌚
picture a token trading at $1 with your liquidity sitting in a range from $0.90 to $1.10, and then the price moves to $1.15 overnight.
that leaves your money outside its range and earning no fees, while trades carry on in the pool without you.
that is the weakness of a single price range, and @liquidityladder is a web interface for uniswap and pancakeswap that builds a ladder instead, meaning many ranges spread across the price and not just one.
this 🧵+🎥 walks through how that works, from the basic idea to the limits, so you can judge it for yourself.
the video here is the full summary, and the tweets below break each part down with their own short clip.
Cipher 🍀 retweeted
picture a token trading at $1 with your liquidity sitting in a range from $0.90 to $1.10, and then the price moves to $1.15 overnight.
that leaves your money outside its range and earning no fees, while trades carry on in the pool without you.
that is the weakness of a single price range, and @liquidityladder is a web interface for uniswap and pancakeswap that builds a ladder instead, meaning many ranges spread across the price and not just one.
this 🧵+🎥 walks through how that works, from the basic idea to the limits, so you can judge it for yourself.
the video here is the full summary, and the tweets below break each part down with their own short clip.
it works across bnb chain, base, ethereum and robinhood chain
and the whole idea fits in one sentence: one budget spread over many price levels instead of one bet on a single range.
if you have only ever provided liquidity with one range, the docs walk through setting up a ladder step by step before your next position
and they are worth a read at docs.liquidityladder.app/en
@liquidityladder
the practical part is that you don't build any of this by hand, and here is what liquidity ladder handles for you:
◯ it creates the whole ladder in a single transaction
◯ if you only hold one token, zap swaps the needed portion and mints the two-sided ladder in that same transaction, then returns anything unused to your wallet
◯ afterwards you can add a rung at the edge, flip a filled one-sided ladder, or migrate it to another fee tier of the same pair without a swap
◯ creating a ladder carries a 0.10% service fee on the stablecoin or wrapped-native part of the input, on top of gas and the pool's own fee
what a ladder does not fix is worth saying out loud, because it would be easy to oversell.
the usual risks of concentrated liquidity still apply, and the docs add a few of their own:
◯ as the price moves through your rungs you end up holding more of whichever token is falling, which is what people call impermanent loss
◯ a rung only earns fees while the price is inside it
◯ a wrong starting price on a new pool can cost you as soon as another trader swaps
◯ some v4 pools have hooks that can block withdrawals or take funds
so check the pool before you put real money in.
here is a small hypothetical to make it concrete, and these numbers are invented for example, not platform performance.
say a token sits at $1 and you set that $0.50 to $1.20 range with five rungs and $1,000 behind it.
as the price drifts down through the lower rungs, those positions gradually swap your usdt into the token, and as it climbs back they swap the other way.
each rung earns the pool fee on the trades that pass through it, so the ladder keeps working across a wider stretch of price than a single range would.
the second choice is how the money gets spread across the rungs, and this is where a ladder becomes more than just several positions.
you set a total amount and a distribution, and the docs list these options:
● linear, quadratic, exponential and fibonacci profiles
● a custom blend of linear and equal shares, available from 5 rungs
● your own saved presets
● anywhere from 1 to 50 rungs
the same budget can take a different shape, and the preview table shows how much lands on each rung before you confirm anything.
the rungs have names that matter, and they decide what kind of ladder you end up with:
● bid rungs sit below the current price
● ask rungs sit above it
● a range on both sides of the price gives a two-sided ladder, while a range entirely below it gives a one-sided bid-ask ladder
the docs' own example takes a token at $1 and sets the range from +20% to -50%, which works out to $0.50 up to $1.20.
they say clearly that it only shows what the fields do and is not a suggested range.
a ladder is a set of liquidity positions spread across a price range, and each single position inside it is called a rung.
so a ladder with five rungs is five separate positions, each covering its own slice of the range, the same way every step on a physical ladder sits at its own height.
you choose the range, the total amount and the number of rungs, and the app calculates the positions for you.
that means instead of one bet on where the price will stay, you get many smaller ones laid out across the whole range.
if some of that was new, providing liquidity means putting two tokens into a pool so other people can trade against them, and you earn a small fee on every trade that passes through.
on uniswap and pancakeswap v3 and v4 you also choose the price range your money works in, and it only earns fees while the price sits inside that range.
that is exactly why the example above goes quiet the moment the price leaves, and it is the gap a ladder is built to cover.
picture a token trading at $1 with your liquidity sitting in a range from $0.90 to $1.10, and then the price moves to $1.15 overnight.
that leaves your money outside its range and earning no fees, while trades carry on in the pool without you.
that is the weakness of a single price range, and @liquidityladder is a web interface for uniswap and pancakeswap that builds a ladder instead, meaning many ranges spread across the price and not just one.
this 🧵+🎥 walks through how that works, from the basic idea to the limits, so you can judge it for yourself.
the video here is the full summary, and the tweets below break each part down with their own short clip.