FLIP Strategy

The Flip Strategy is a rebalancing technique designed for liquidity providers (LPs) dealing with pegged assets. It focuses on accumulating tokens below their peg and selling them for profit when they rise above it. This strategy effectively covers fixed, steadily increasing, decreasing, or variably moving pegs.

Initial Setup: LPs deposit 100% of their desired pegged asset into a Single-sided Deposit Vault.

Flexible Strategy: The Flip Strategy adapts to different peg scenarios, whether fixed, steadily increasing, decreasing, or variable.

Deposit Position Management: The vault maintains 100% of deposit tokens when above the peg, while below, it holds both deposit and quote tokens.

Quote Positioning: Below the peg, the strategy contains 100% quote tokens, transitioning to holding both tokens when above the peg.

Quote Replenishment: The strategy adjusts deposit positions to shift quote tokens, enhancing the chances of selling them at a profit.

Volatility Protection: It utilizes long Time-Weighted Average Price (TWAP) observations to adjust the peg, capping how much the peg can shift during each update.

Liquidity Independence: The Flip Strategy operates without relying on other liquidity providers, ensuring consistent liquidity management.

By implementing the Flip Strategy, LPs can enhance their yields in pegged asset pairs while contributing to the stability of the peg itself.