WBTC/WETH Liquidity Pool: A Technical Analysis

In the MPY Token ecosystem, liquidity pools play a central role in generating profitability and financial sustainability. The analysis of the WBTC/WETH pool, as illustrated, highlights a strategic approach to optimizing yields. In this pool, liquidity is concentrated in the price range of 0.03512541 to 0.0408096, representing a carefully defined interval to maximize the efficiency of exchanges between WBTC and WETH. This configuration is based on a projected volatility of 13.93%, guaranteeing a stable environment for operations.

Each transaction carried out within this range generates a fee of 0.3% per swap, distributed proportionally among the liquidity providers. This mechanism ensures that pool participants are rewarded fairly, aligning incentives and promoting continued participation within the ecosystem.

The current configuration of the pool demonstrates a precise adjustment of the liquidity range to capture the highest possible volume of trades. With this, the daily return reaches $11.88, corresponding to 0.12% of the total amount deposited. Over a 28-day period, the accumulated return totaled $308.80, demonstrating the consistency and effectiveness of this strategy.

The choice of this liquidity range is not random, but the result of an in-depth analysis of market conditions. This process allows the ecosystem to maximize returns without compromising asset security.

Although the volatility of 13.93% ensures a solid basis for trading, a detailed analysis of historical price behavior indicates that additional adjustments can result in even greater gains. By refining the liquidity range and reducing the volatility delta, it is possible to capture more profitable transactions within a smaller price range. This not only increases swap rates, but also mitigates risks associated with large market swings.

Simulations indicate that by adjusting the volatility range to 7.5%, the daily return can be increased by up to 6 times. In an even tighter scenario, with volatility limited to 3%, the daily return can reach almost 12 times the initial value, amounting to an impressive 0.47% of the deposit per day.

These figures demonstrate the significant impact of active and strategic management of liquidity ranges, giving the MPY ecosystem a competitive edge in the DeFi market.