Managing Liquidity Positions

Managing And Strategies

Providing liquidity in Pangolin V3 is not a “set-and-forget” forever operation (unless you choose an extremely wide range). You’ll want to manage your position actively.

Monitoring Price vs. Range

Keep an eye on the current price of your pool’s pair relative to your chosen range. The Pangolin interface will typically indicate if your position is “in range” (earning fees) or “out of range” (price has moved outside your bounds). If out of range, your liquidity is essentially all concentrated into one of the two tokens (whichever side it exited on) and is no longer generating fees until the price moves back into your range. You might choose to adjust your position at that point.

Adjusting a Range

Pangolin does not directly “move” an existing range (since the position is an NFT). To adjust your range, you would generally withdraw your liquidity (or a portion of it) and then re-add it with a new range that captures the current price. The dynamic range adjustment capability of Pangolin means you can respond to market volatility or new information by narrowing or widening your range anytime. For example, if a token’s volatility decreases and you expect the price to stay in a tight band, you might concentrate more narrowly to earn higher fees. If the token is about to have a major event causing volatility, you might widen your range (or even temporarily withdraw to avoid impermanent loss).

Adding or Removing Liquidity to an Existing Position

If you want to increase your liquidity in the same range (i.e., deposit more tokens into that position NFT), Pangolin’s interface may allow it by essentially minting more of the same position. If not, you can always create another position with the same range (which is effectively the same outcome of having more liquidity at that range). To decrease or partially withdraw liquidity, you can use the remove function and specify how much of your position to pull out (e.g. 50% of it). This will burn that portion of the NFT liquidity and return the underlying tokens to you.

Strategies for Managing Liquidity Positions

Being an LP in Pangolin V3 often involves a bit of strategy: You’ll earn fees when in range, but you also face impermanent loss (IL) if the price moves significantly. Impermanent loss in V3 is more dynamic – it’s essentially the opportunity cost of having one asset converted to the other as price moves. By concentrating liquidity, you earn more fees which can compensate for IL, provided the price oscillates in your range. If price runs away one-directionally outside your range, you may end up holding mostly one asset (the one that the pool converted your liquidity into). It’s recommended to manage your positions and not let them sit out of range for too long unless you intentionally want to hold the asset you’ve converted to.

Pangolin provides analytics for LPs to make decisions. You can view the total liquidity in the pool and your share, the 24h volume (to gauge fee potential). Use this information to adjust your strategy. Some LPs rebalance daily or weekly; others set wider ranges to reduce the need for frequent updates. It’s up to your risk preference and market outlook.