Range Prediction & Pilot NFT

Range Prediction

We’ll be using a modular architecture for this and can swap out this module to support any algorithm. We will go ahead with the algorithm explained below.

Each pool range strategy will be initialized with the default parameters. The parameters include spread, tick average in a duration(twapDuration), and maximum price deviation. Whenever a captain calls the rebalance function, the smart contract calculates how much the price has deviated from the average tick in twapDuration, and the deviation should not be more than the max deviation threshold.

For the base position the spread is added and subtracted to the current price and bid or ask position, the spread is either added or subtracted from the current tick. Maximum liquidity possible is added in the base position and the remaining reserves are placed as a bid or ask order depending upon the token remaining in the reserves.

The default parameters can also be modified for each pool using governance. For example, the spread could be set to a very smaller value in stable token pools compared to other volatile pairs.

PILOT NFT

Similar to Uniswap, the Pilot protocol will issue NFT’s to users representing their share of the vault.

NFT will store the following values:

1. Nonce: To support permit

2. Pool: Uniswap pool address

3. Liquidity: A number representing the share in the total liquidity of that particular pool