Question 1

What is a Custom Concentrated Liquidity Position?

Accepted Answer

A Custom Concentrated Liquidity (CCL) position is an algorithmic strategy that lets you provide liquidity within a specific price range. It will automatically trade market movements every block (6 seconds) as long as the price stays in the range you set. This makes your capital more efficient compared to traditional XYK strategies because it is concentrated where trading is expected to happen. You earn more profits while price stays inside your selected range. The tighter your range, the more trading volume your position can capture while price remains inside that range, and the more fees you can earn. The downside is that tighter ranges also increase the chance that price moves outside your range, leaving you fully exposed to the underperforming asset and no longer generating yield while price remains out of range. Choosing the right range depends on your time horizon and your market view on the two assets. For example, in a BTC/USDC CCL position, it can be helpful to ask yourself: At what price would you be happy to hold 100% BTC? At what price would you be happy to hold 100% USDC? If BTC is currently at $90,000 and you believe it is unlikely to fall below $70,000 or rise above $150,000 during the period you want to hold the position, you could use that as your range. That means you are comfortable continuing to buy BTC with USDC down to $70,000, and comfortable continuing to sell BTC for USDC up to $150,000, while earning fees as long as the price stays inside that range. To open a position, visit RUJI Trade, choose the pair you want to trade, turn on the "Algorithmic" toggle at the top right of the page, select your range, spread (target profit between your buy and sell orders) and fee (how much of the profit you retain as claimable yield or let compound inside the position), enter how much you want to invest, then sign the transaction.

Question 2

How can I open a position?

Accepted Answer

To open a Custom Concentrated Liquidity position, follow these steps: 1. Visit RUJI Trade. 2. Choose the pair you want to trade. 3. Turn on the "Algorithmic" toggle at the top right of the page. 4. Select your range. 5. Select your spread, which is the target profit between your buy and sell orders. 6. Select your fee, which determines how much of the profit you retain as claimable yield or let compound inside the position. 7. Enter how much you want to invest. 8. Sign the transaction.

Question 3

What is impermanent loss?

Accepted Answer

Impermanent loss in Custom Concentrated Liquidity is the reduction in value that happens when the prices of the two tokens move apart, leaving your position worth less than simply holding them separately. As the market moves within your chosen range, the strategy sells some of the outperforming token and buys more of the underperforming token, which can reduce the value of your position compared to just holding the assets. If the price moves outside your range, your position becomes fully one sided, which can increase the loss further if price never comes back into range. This means CCL positions can have higher impermanent loss than standard constant product positions, but they can also generate much higher yield while the price stays inside the selected range. Impermanent loss has traditionally been criticized in DeFi, particularly in the early days when upside volatility was extremely strong and people were often better off simply holding the winning token rather than trading it against stablecoins. But volatility can also move the other way, especially in crypto where prolonged bear markets tend to follow periods of euphoria. Rather than trying to predict whether price will go up or down next, it can be easier to predict that there will be volatility inside a range. Instead of fearing impermanent loss, you can treat it as a feature that helps you average down on core positions when price moves below your range, take profit when price moves above your range, and earn yield trading volatility while price remains inside your range. Just make sure to only trade tokens, both base and quote, that you are happy to hold long term, and choose a range that works for you.

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Custom Concentrated Liquidity

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