Liquidity Efficiency

The innovation brought by the Concentrated Liquidity system on Uniswap V3 revolutionizes the classical AMM system that offered until now a uniform distribution. A liquidity pool that covers trading in a price range (0, ∞) is not optimized.

This new system allows liquidity providers to choose the price range on which they want to deploy their funds, to earn fees on the traded volume and to implement different strategies. In order not to make this part too tedious we will not go into technical details. We invite you to read their docs here: https://docs.uniswap.org/ What we are interested in here is how we are going to manage our LP to collect the maximum amount of fees on the one hand and to create a solid floor price on the other. The main idea is that if our treasury grows then the price of the $KTN can be virtually backed by the following formula: Backed price = circulating supply ÷ treasury* To affirm this backed price one of the possibilities will be to create a wall of liquidity around this backed price, the principle of the liquidity wall being to concentrate the liquidity in a certain area in order to create a solid support.

This strategy allows to make the backed price more resistant. To do this, a reorganization of the LP is necessary.

It is necessary to create one or more Uni v3 positions containing USDC in a very concentrated price range around the backed price. This will place these LPs out of range because the market price is likely to be higher than the backed price. On the other hand, if the price dips into the defined range, then there will be a real "wall" to absorb the sales, which will allow the price to be maintained and then to rise again.