๐Ÿฆž
Lobster - Documentation
  • ๐Ÿ‘‹START HERE
    • ๐ŸฆžLobster overview
    • ๐Ÿ–ฅ๏ธApp guide
      • โœ…Deposit
      • ๐Ÿ“ŠDashboard
      • ๐Ÿ”ƒWithdraw
    • ๐ŸฆŠ Step-by-Step Guide: How to deposit on Lobster
      • Step 0: Identify Your Situation ๐Ÿ”
      • Step 1: You donโ€™t have any cryptos. ๐Ÿ˜ข
        • Way #1 : Create a centralized exchange account and buy your first cryptos ๐Ÿฅ‡
        • Way #2 : Buy your first cryptos directly in Metamask on Arbitrum Network ๐ŸฆŠ
      • Step 2 : How to send my cryptos from a centralized exchange on my personal Metamask Wallet ๐Ÿ“จ
      • Step 3 : How to bridge ETH from Ethereum mainnet (or another chain) to Arbitrum ๐ŸŒ‰
      • Step 4: Convert ETH to WETH on Arbitrum ๐ŸŽ
      • Step 5: Deposit WETH into Lobster Protocol ๐Ÿฆž
    • โš ๏ธDisclaimers
  • โš™๏ธDeFi Strategy
    • ๐Ÿ“ˆStrategy overview
    • โš–๏ธNeutral market exposure
    • ๐Ÿ’งLiquidity & impermanent loss management
    • โณRebalancing frequency
  • ๐Ÿง Algorithm
    • ๐Ÿ“ŠInput/Output datas
    • ๐Ÿ“Arbitration workflow
    • โฎ๏ธBacktest report
  • ๐Ÿ”SECURITY
    • ๐Ÿ›๏ธInfrastructure
    • ๐Ÿ“„Contracts & Audits
    • ๐Ÿ›ก๏ธInsurance
  • ๐Ÿ”TRANSPARENCY
    • โ›“๏ธOnchain activity
    • ๐ŸŽIncentives
    • ๐Ÿ“…Roadmap
    • ๐Ÿ”–Vault fees
    • โ“FAQ
  • ๐Ÿช‚Airdrop
    • ๐Ÿช™Point system basics
    • ๐ŸŽ–๏ธAll ways to earn points
      • Using the protocol ๐Ÿง‘โ€๐Ÿ’ป
      • Referring Lobster to your friends ๐Ÿค
      • Being an active community member ๐Ÿ‘จโ€๐Ÿ‘ฉโ€๐Ÿ‘งโ€๐Ÿ‘ฆ
      • Helping the team improve the product ๐Ÿ’ก
  • SOCIAL
    • ๐ŸฆžDapp
    • ๐ŸฆX
    • ๐ŸŽฎDiscord
    • ๐Ÿ“จTelegram
  • Legal documentation
    • ๐ŸจLegal Notice
    • ๐Ÿ“–Lobster's Website Terms and Conditions
    • ๐ŸชPrivacy Policy
Powered by GitBook
On this page
  • Input data โ–ถ๏ธ๐Ÿ”š
  • Output data ๐Ÿ”š
  1. Algorithm

Input/Output datas

What datas are useful for the Lobster algorithm to work properly?

PreviousRebalancing frequencyNextArbitration workflow

Last updated 10 months ago

Input data โ–ถ๏ธ๐Ÿ”š

For our algorithms to work properly, we need a certain amount of market data for the algorithm to take the best decisions.

As an example, here are all the datas used by our algorithm for the BTC strategy on the BTC/ETH pool. This data is retrieved in real-time by the algorithm directly on-chain. We have also retrieved all the historical data since the creation of the pool in order to backtest the performance that the strategy would have given if it had been launched earlier.

Here are the input data used for the Lobster algorithm:

Full range APR history of the of the BTC/ETH uni v3 pool on Arbitrum

Output data ๐Ÿ”š

The algorithm's output data is simpler than the input data. In fact, there are only 3:

  • The concentration chosen for our liquidity-providing position on Uniswap v3. This corresponds to a figure between 1 for full range liquidity, and 40,000 for extremely concentrated liquidity on a single tick.

  • The exposure of the deposit token in relation to our overall position. If we create a liquidity range where one of the edges is close to the current price, the exposure will be either 0% or 100%. This variable is therefore also bounded between these two values.

  • The borrow ratio on the lending protocol, between the deposit token and the borrowing token. Borrowing more or less from one token or the other will modify the strike price of the Uniswap v3 call option. A liquidity providing position is equivalent to buying a long gamma option. To modify the strike price of our position (and therefore the price at which our profit is maximized), we borrow more or less token. This variable ranges from 0%, when we don't want to borrow, to the liquidation limit, which is often around 80%.

These three parameters enable us to regulate our entire pseudo-market neutral position on a liquidity pool. They are then translated into actions to be executed on the chain via the smart contracts of the underlying protocols by our arbitration workflow.

TVL history of the BTC/ETH uni v3 pool on Arbitrum
Active liquidity of the BTC/ETH uni v3 pool on Arbitrum
Quote of the BTC/ETH uni v3 pool on Arbitrum
Average liquidity concentration of the BTC/ETH uni v3 pool on Arbitrum
๐Ÿง 
๐Ÿ“Š