Key concepts
To deliver automated, high-yield returns, AURA Yields' algorithms are built on four key pillars. Understanding these concepts is key to understanding the value we provide.
1. Price Bands
This is the active range where liquidity is placed to earn fees.
In a Concentrated Liquidity (CLMM) DEX, liquidity must be "concentrated" within a specific price range. If the price is within this band, you earn fees. If the price moves outside this band, your capital stops working and earns nothing.
The core challenge is balancing risk and reward: a narrow band captures the most fees but risks becoming inactive quickly. A wide band is safer but less profitable.
2. Strategy Reset Bounds
"Reset Bounds" are the predefined triggers that tell our algorithm when it is time to move the liquidity.
How it works: When the market price of an asset moves and is about to exit our active Price Band, it hits a Reset Bound.
The AURA Solution: This event automatically triggers our "Rebalance Logic" to withdraw the liquidity and redeploy it into a new, more optimal range that follows the current price. This is what a human manager would do, but our system does it 24/7, instantly.
3. Rebalance Logic
This is the "brain" of our operation. The "Rebalance Logic" is the proprietary algorithm that executes the rebalancing event.
How it works: When a Reset Bound is hit, our logic automatically:
Calculates a new, optimal Price Band based on current market data.
Withdraws the liquidity from the old range.
Performs the necessary atomic swaps to re-adjust the asset ratio.
Deploys the capital into the new Price Band.
The AURA Solution: We fully automate this entire complex sequence, which traditionally must be done manually. This saves LPs from constant monitoring and high transaction fees.
4. The IL vs. Fees
This is the fundamental challenge of all liquidity provisioning.
The Challenge: Concentrated liquidity generates higher fees but is also far more susceptible to Impermanent Loss (IL) when the price moves. The goal is to always earn more in fees than you lose to IL.
The AURA Solution: Our entire strategy is built to manage this balance. By dynamically rebalancing, we ensure the liquidity is always working and capturing high fees. Our primary goal is for the compounded fee generation to significantly outweigh the impact of Impermanent Loss over time, delivering a superior, risk-adjusted APY.
Last updated