After discussing these ideas with Dan Robinson and a few other people, I now realize that implementing my earlier proposal may require too big of a change to the Staker contract.
Note sure what’s the status of that proposal is, but I agree that one way forward could be to mandate that liquidity is deployed to a minimum “floating” range – ie have the position’s (upperTick-lowerTick) be larger or equal than a fixed value be centered at any price.
Choosing that range could be tricky, but it could be based on the 1-std expected move. For instance, a 1-std expected move for a 100% annualize volatility after 21 days is ±24%. So limiting the LP range to ±24% would only require a rebalancing every 21 days, on average.
By comparison, a 1-tick position in the 0.3% pool would need to be rebalanced every 20 minutes (clearly impossible to do unless you run bots), but successfully running this strategy would results in 34x more rewards than ±24% LP positions.
BTW, I suggested 21 days, but the number of days could be changed to whatever according to
- Expected move = (annual volatility) * sqrt(days/365)