Liquidity Shape
In Bidask Protocol, Liquidity Shape refers to the customizable distribution of tokens within each price bin of a liquidity pool, allowing liquidity providers (LPs) to create a custom shape of liquidity in a single transaction. This feature gives LPs flexibility to manage how their liquidity is spread across different price intervals, optimizing their strategy in terms of expected average price and potential impermanent loss.
Predefined Shapes
Although any distribution is possible, Bidask offers three popular predefined liquidity shapes as ready-made options:
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Spot: A flat distribution of liquidity across bins, similar to traditional decentralized exchanges. This shape provides equal liquidity at all price levels.
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Curve: Concentrates most liquidity toward the active price, balancing a broad overall range with focus near the market price. This shape is ideal for earning more fees during low-volatility periods while maintaining liquidity coverage.
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Bid-Ask: Focuses liquidity further away from the active price, placing more liquidity on the bid and ask sides. This configuration targets high-volatility scenarios, helping LPs earn more fees when the price fluctuates widely.
By enabling these shapes, Bidask helps liquidity providers tailor their capital allocation to match their risk appetite and desired fee-earning potential, making liquidity provision more efficient and strategic.
