GM PancakeSwap community,
PancakeSwap is thrilled to announce a strategic partnership with Teahouse Finance, a provider of comprehensive liquidity management solutions. This collaboration introduces new vault strategies featuring diverse trading pairs, simplifying liquidity management for users on PancakeSwap v3.
There are four vault options available: the USDC.e-WETH and WBTC-WETH vaults, each with a 0.05% fee; the USDC.e-USDT vault with a minimal fee of 0.01%; and the wstETH-WETH vault, also with a 0.05% fee. This guide will assist you in navigating these options to optimize your liquidity management.
About Teahouse Finance’s Vaults
Teahouse Finance provides diverse professional investment strategies that align with users’ risk tolerance and investment goals. Much like a hedge fund, Teahouse’s platform assists both enterprise and individual clients in growing their crypto assets through secure and transparent asset management. Teahouse LP Vaults are dual-token vaults that allow users to provide liquidity by depositing token pairs into selected strategies managed by Teahouse or partners.
Teahouse’s LP Vaults on PancakeSwap utilize either the Single-sided LP Strategy or the Adaptive Portfolio Strategy.
The Single-sided LP Strategy: Unlike traditional LP, the Single-sided LP Strategy sets a price range above and a price range below the current spot price, each with one asset type as liquidity and waiting for the spot price to move into range. The strategy aims to maximize profits by narrowing the LP ranges for higher, more concentrated fees.
The Adaptive Portfolio Strategy: This strategy applies various fundamental portfolio-building concepts (e.g. mean-reversion and exponential gradient) to adjust the liquidity depth (weights) around the spot price. The performance of each method is analyzed via back-testing to identify the approach that delivers the highest swap fees earned. The strategy manager re-evaluates the algorithms periodically to ensure that the selected strategy still fits the current market conditions, and if not, switch to the current-best algorithm.
How Teahouse Finance’s strategies work on PancakeSwap v3
Teahouse Finance’s LP Vaults on PancakeSwap v3 offer users an effortless way to deposit liquidity directly from Pancake's platform and utilize Teahouse strategies. By utilizing Teahouse's expert position management, these LP Vaults execute dynamic DeFi strategies that react to market signals in real time.
With the Single-sided LP Strategy, the two deposited tokens are placed as two single-sided LP ranges sandwiching the pair's spot price. This lowers the frequency of rebalancing, which in turn reduces the divergence loss ((when impermanent loss becomes realized). Providing single-sided LP helps mitigate the transaction costs incurred from frequent rebalancing, which is the case for double-sided LP positions (covering the whole price range) where swap fees are required to reinvest the fee earnings back into the LP pool.
As this strategy aims to maximize profits by narrowing the LP ranges, it requires some prediction of future price changes. Here is an example of how the price ranges are positioned and the changes in spot price. The red and blue sections represent single-sided positions for each token. You can see how the strategy can anticipate price changes and adjust each position accordingly.
For the Adaptive Portfolio Strategy, Teahouse selected and evaluated various established portfolio strategies to see which performed the best recently. This strategy currently adopts the 50:50 equal-weight strategy (holding 50% in Token A, 50% in Token B, with equal weights across all positions), which, according to testing results, consistently performed the best over the time period tested. However, Teahouse continues to reassess the performance of the various portfolio strategies to ensure that it consistently utilizes the top-performing strategy.
The LP Vaults, overseen by professional Strategy Managers at Teahouse, provide users with not just robust risk management features, but also automated management, re-balancing, and compounding benefits. Simply deposit your assets and allow Teahouse to manage and grow them on your behalf.
How to use Position Manager on PancakeSwap with Teahouse Finance’s strategies
- Visit our Position Manager Page.
- In this case, we'll choose the pairs marked as "managed by Teahouse Finance' to try out their strategies.
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Once you've chosen the trading pair with its respective strategy, click the "Add Liquidity" tab.
4. A dropdown will appear displaying the needed deposit token, APR info, and the strategy provider's management fee. Specify the token quantity you wish to deposit and then "Approve [Token].”
5. Review the details once more, and then click "Confirm.”
Enhance Your Experience with PancakeSwap's Position Manager
PancakeSwap's Position Manager is designed to simplify the liquidity provisioning process for LPs, aiming to reduce losses and increase profits. For more details about its features and our collaborations, check out our announcement blog: https://blog.pancakeswap.finance/articles/pancakeswap-rolls-out-the-position-manager-feature-on-v3.
Enjoy
The Chefs