Gamma

Gamma liquidity management: Range adjustments, triggers, and token allocation

Gamma liquidity management adjusts concentrated-liquidity ranges when a strategy reaches its configured price or asset-allocation triggers. Dynamic strategies reposition ranges relative to the market price, while reference-based strategies follow a different price relationship. These adjustments change where assets participate in trading and can leave the vault holding unequal token amounts. Gamma runs its decision logic offchain and executes position changes onchain. A range adjustment does not necessarily involve an immediate market swap: limit positions can let subsequent pool trading change the inventory. Understanding a rebalance therefore requires looking at the strategy, the resulting ranges, and the assets that those ranges contain.

Key takeaway: A range adjustment changes where liquidity participates, while pool trading determines how the underlying token quantities evolve.

Narrow, wide, and reference-based ranges

Dynamic range width determines how tightly a strategy concentrates liquidity around its selected price area. Narrower ranges concentrate participation, whereas wider ranges accommodate greater price movement before the market leaves the position. During prolonged volatility, additional fees from a narrow range may fail to offset its greater divergence costs.

Stable strategies target an expected relationship between assets. Pegged-price strategies can instead follow net asset value, with adjustments at specified reference-price targets. Market price can diverge from that reference, leaving liquidity outside the trading range. These strategies therefore require different interpretations of an unchanged band: its reference may not have moved alongside the market.

What triggers a range adjustment?

Gamma uses market-price and asset-ratio conditions to trigger rebalances, rather than a universal schedule that applies to every vault. Dynamic strategies include percentage price movements among those conditions. The relevant threshold belongs to the selected strategy; a range width alone does not establish its trigger.

Gamma evaluates LP rebalancing decisions offchain and executes the resulting adjustments onchain. A price crossing and a completed transaction are separate events. A chart can show the former without proving the latter. Likewise, continuous strategy operation does not mean that every price movement produces a transaction.

Neither a previous rebalance price nor elapsed time establishes the next threshold.

Base and limit positions during execution

Gamma’s classic dual-position design manages a base position alongside a limit position. Their ranges share the vault’s inventory, but they need not contain the same token proportions. Positioning can change before subsequent trading completes an intended inventory adjustment.

Base and limit allocations

Base position

The base position provides the principal range. In Hypervisor v1.3, a rebalance removes existing liquidity before deploying available assets into the replacement base range.

Limit position

The limit position uses assets remaining after the base allocation. Its placement lets pool trading move inventory toward the desired quantities. Placing that liquidity does not establish that the intended conversion has finished.

Both positions matter when interpreting the vault. Looking only at the base range can miss liquidity in the limit position. Conversely, an inactive limit position does not establish that the base position has also stopped participating.

Token conversion inside and outside a range

Pool swaps change a position’s token quantities as price moves through its range. Traders remove one asset and supply the other. At a boundary, the position can consist entirely of one asset, even though it began with both.

A concentrated-liquidity position stops earning swap fees while the market price remains outside its range. Existing holdings and previously earned fees do not disappear when liquidity becomes inactive. If price returns to the range, that liquidity can participate again. A vault with several positions may retain active liquidity elsewhere.

Range placement also affects how inventory conversion unfolds. A single-sided range can progressively exchange its asset as trades cross the band. That mechanism exposes the holdings to the path that price takes, so the token mix after a rebalance need not reproduce the original deposit mix.

Liquidity distribution across multiple positions

Gamma’s Uniswap V4 strategies distribute liquidity across multiple positions, making the amount available at each price another variable alongside the outer boundaries. A market can remain inside the overall band while moving into an area with relatively little deployed liquidity.

Uniform distributions spread liquidity evenly across the selected range. Triangle distributions increase it linearly toward the center, while Gaussian distributions use a bell shape. Exponential distributions cluster liquidity more sharply near the selected price. These shapes determine how available liquidity varies across the range.

The Order Book distribution places peaks around the price with less liquidity in the center. Its suitability depends on price movement through those areas, including mean reversion. None of these shapes establishes a common rebalance threshold. Interpreting a range change requires comparing the distribution as well as its endpoints.

Transaction records and fee reinvestment

A completed rebalance should have a successful transaction record for the intended vault. For classic Hypervisor contracts, the Rebalance event helps identify that operation. Reading the resulting position boundaries adds information that an event label alone cannot provide.

Fee processing needs separate interpretation. Hypervisor v1.3 can compound available assets into existing ranges without changing their boundaries. Its ZeroBurn event records fee processing and can also occur within other operations. Treating every such event as a range adjustment would overcount rebalances.

A reinvestment can increase deployed assets without creating a new personal deposit. Fees also represent only part of the economic outcome. Changes in token prices and quantities affect position value, so a larger fee balance does not by itself establish a profitable rebalance.

Reconciling a stale range display

Suppose a classic vault shows old boundaries after a successful rebalance transaction. Check whether the display is stale or the position is unchanged before submitting another transaction. Start with a browser reload and read the same vault’s position state again; neither action changes the holding.

If the refreshed display now matches the recorded boundaries, the mismatch has cleared. The displayed market price can still move afterward. Compare price and ranges from a consistent observation point rather than assuming that a newer price belongs to an older snapshot.

• Match the vault and network before comparing transaction records.
• Confirm that the transaction succeeded and includes the relevant rebalance event.
• Compare both base and limit boundaries with the refreshed display.
• Keep the configured trigger separate from the observed range endpoints.
• If the mismatch persists, pause additional deposits while reconciling the display with contract state.

A matching display resolves the viewing problem. It does not reverse the rebalance or prove that its allocation target has finished converting. If no successful rebalance exists, refreshing cannot create one, and elapsed time alone cannot establish that a trigger has failed.

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Withdrawal after a range change

A withdrawal returns assets from the position that exists when the transaction executes. Rebalancing does not preserve a claim to the exact token quantities originally deposited. The withdrawal preview therefore needs the current composition, including the effects of trading and accrued fees.

Withdrawing ends participation for the redeemed portion; it does not undo the trades that produced its token mix. Any later exchange into a preferred asset is a separate action with its own execution conditions. The concrete exit outcome is the quantity of each token received, rather than a return to an earlier range or allocation.