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Rules For Automating PowerPools

  • Updated

Introduction

As the market moves, you may find that it behooves you to change the parameters of your PowerPools to keep them efficient. In periods of high volatility, making these changes manually can get tedious, and in the worst case scenario, you may even miss moves of the market such that your pool goes out of range and stops earning yield. Setting rules to automate these changes will help to simplify the management of your pools.

Rules are comprised of two parts: conditional triggers and resultant actions; both of these parts must be specified in order for the rules to work.

Triggers

Triggers are simple conditions that when met, will tell the platform to execute pre-defined actions on your pool. You can only set one layer of triggers, but this will prevent unexpected behavior arising from multi-layered trigger conditions.

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There are three types of triggers to choose from:

  1. Periodic
  2. USD Value
  3. Percentage of Liquidity

Periodic

This sets the rules to run at regular intervals. You can specify this interval using minutes, hours, or days. The shortest time interval you can set is once every 5 minutes, and the longest time interval is 30 days.

USD Value

This sets the rules to run every time the yield accumulated by the pool hits a certain USD threshold, X. Every X USD of yield that the pool earns, the rules are run once.

Percentage of Liquidity

This sets the rules to run every time the yield accumulated by the pool (X) is equivalent to a certain percentage (Z) of the current total liquidity in the pool (Y). The percentage trigger runs the rules every time X/Y=Z. 

Note that the value of Y fluctuates as the total value of the pool changes with market movements and transfers of liquidity in and out of the pool.

Rules

When the specified trigger conditions are met, PowerPools will attempt to execute specified actions. You can specify rules from the following list:

  1. Drift
  2. Reinvest Yield
  3. Pool Protection

Rules will only be executed if there are enough allocated funds to do so. The amount required varies depending on market conditions and pool parameters. 

Drift (Auto-Rebalance)

The operational range of a pool can be set as wide or as narrow as you choose. A pool that has a narrow range packs its available liquidity closer together which allows it to earn yield at a faster rate, but the downside of this is that the pool can quickly find itself out of range in periods of high price volatility. A pool that goes out of range ceases to earn yield until the spot price of the base moves back into the pool's range, or until the user manually adjusts the pool's operating range.

The Drift feature reduces the need for you to manually readjust the pool's operating range. When the Drift feature is enabled on your pool, PowerPools will automatically adjust the operating range of the pool according to parameters specified by you. Every time the Drift action is executed, the liquidity in the pool will be rebalanced with the market price of the base asset as an anchor. 

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The parameters governing the Drift action are as follows:

  1. Drift Range
  2. Max Daily Drift
  3. Drift Allocation

Drift Range

The Drift Range parameter adjusts the new range of the drifted pool relative to the pool's upper and/or lower operating limits pre-drift. You can specify the new upper and lower limits in units of USD or in relative "distance" from the pre-drift pool's upper and lower limits. To specify the range, either type in the values manually, use the plus and minus buttons, or use the sliders to set relative distance from the anchor price. 

Max Daily Drift

This parameter specifies the maximum percentage that the mid-price of the pool may move in a 24 hour period.

Drift Allocation

Specifying Drift Allocation tells the PowerPools platform to save a portion of yield earned in a bucket every time the Rules are run. PowerPools will use the yield stored in this bucket to fund Drift when they are triggered. If a Drift action is triggered but there are not enough funds in the bucket to perform the action, the Drift action step will be skipped.

Drift Allocation can be specified in one of the following ways:

  1. USD
  2. Percentage of Yield
  3. Percentage of Liquidity
  4. All Remainder

USD

This tells PowerPools to take an amount of USD (capped at a flat limit) from the unclaimed yield to add to the bucket every time the Rules are run. The amount deposited into the bucket each time will not exceed this flat USD limit.

  • Example 1: Unclaimed Yield < USD Drift Allocation
    • Drift Allocation is 50 USD
    • The Rules are triggered, and when the Drift action is executed there is 40 USD in unclaimed yield
    • Result: 40 USD is added to the Drift Allocation bucket, and there is no remaining unclaimed yield 
  • Example 2: Unclaimed Yield > USD Drift Allocation
    • Drift Allocation is 50 USD.
    • The Rules are triggered, and when the Drift action is executed there is 60 USD in unclaimed yield
    • Result: 50 USD is added to the Drift Allocation bucket, and 10 USD is left in unclaimed yield

Percentage of Yield

This tells PowerPools to take up to a percentage of yield earned by the pool to add to the bucket every time the Rules are run. The actual amount deposited to the bucket will vary depending on the amount of unclaimed yield at the point that the Rules are run.

  • Example
    • Drift Allocation is 30.00% of yield
    • The Rules are triggered, and when the Drift action is executed there is 100 USD in unclaimed yield
    • Result: 30 USD is added to the Drift Allocation bucket, and 70 USD is left in unclaimed yield

Percentage of Liquidity

This tells PowerPools to deposit to the bucket an amount that is proportional to the current total value of the liquidity in the pool every time the Rules are run. The actual amount deposited to the bucket will vary depending on the total value of the liquidity in the pool at the point that the Rules are run.

  • Example 1: Unclaimed Yield < Percentage of Liquidity Drift Allocation
    • The total liquidity of the pool is 100,000 USD
    • Drift Allocation is 0.50% of liquidity (i.e. 500 USD)
    • The Rules are triggered, and when the Drift action is executed there is 100 USD in unclaimed yield
    • Result: 100 USD is added to the Drift Allocation bucket, and there is no remaining unclaimed yield
  • Example 2: Unclaimed Yield > Percentage of Liquidity Drift Allocation
    • The total liquidity of the pool is currently 100,000 USD
    • Drift Allocation is 0.50% of liquidity (i.e. 500 USD)
    • The Rules are triggered, and when the Drift action is executed there is 600 USD in unclaimed yield
    • Result: 500 USD is added to the Drift Allocation bucket, and 100 USD is left in unclaimed yield

All Remainder 

This option can only be set if Drift is set to be the final action triggered when running the Rules. If this is set, after all the earlier Rules have been executed, PowerPools will deposit any unclaimed yield that remains into the bucket. 

  • Example 1
    • Drift Allocation is set to All Remainder
    • The Rules are triggered while there is 100 USD in unclaimed yield
    • Prior rules use up 60 USD in unclaimed yield
    • Result: 40 USD is added to the Drift Allocation bucket, and there is no remaining unclaimed yield
  • Example 2
    • Drift Allocation is set to All Remainder
    • The Rules are triggered while there is 100 USD in unclaimed yield
    • Prior rules use up 100 USD in unclaimed yield
    • Result: nothing is added to the Drift Allocation bucket, and there is no remaining unclaimed yield

Reinvest Yield

Instead of claiming yield and depositing it to your PowerTrade wallet, you can choose to directly reinvest the earned yield back into your pool, thereby increasing its liquidity and — by extension — its ability to earn even more yield. The Reinvest Yield rule helps to automate this; all you need to do is to set the allocation.

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Reinvestment Allocation

Specifying Reinvestment Allocation tells the PowerPools platform to save a portion of yield earned in a bucket every time the rules are run. The amount specified will be reinvested into your pool each time the Reinvest rule is run. If the amount does not meet the minimum amount required for reinvesting into the pool (and performing any associated rebalancing of liquidity), then the funds will remain in the Allocated Amount bucket.

Reinvestment Allocation can be specified in one of the following ways:

  1. USD
  2. Percentage of Yield
  3. Percentage of Liquidity
  4. All Remainder

USD

This tells PowerPools to take an amount of USD (capped at a flat limit) from the unclaimed yield to add to the bucket every time the Rules are run. The amount deposited into the bucket each time will not exceed this flat USD limit.

  • Example 1: Unclaimed Yield < USD Reinvestment Allocation
    • Reinvestment Allocation is 50 USD
    • The rules are triggered, and when the Reinvest action is executed there is 40 USD in unclaimed yield
    • Result: 40 USD is added to the Reinvestment Allocation bucket, and there is no remaining unclaimed yield 
  • Example 2: Unclaimed Yield > USD Reinvestment Allocation
    • Reinvestment Allocation is 50 USD.
    • The rules are triggered, and when the Reinvest action is executed there is 60 USD in unclaimed yield
    • Result: 50 USD is added to the Reinvestment Allocation bucket, and 10 USD is left in unclaimed yield

Percentage of Yield

This tells PowerPools to take up to a percentage of yield earned by the pool to add to the bucket every time the Rules are run. The actual amount deposited to the bucket will vary depending on the amount of unclaimed yield at the point that the Rules are run.

  • Example
    • Reinvestment Allocation is 30.00% of yield
    • The rules are triggered, and when the Reinvest action is executed there is 100 USD in unclaimed yield
    • Result: 30 USD is added to the Reinvestment Allocation bucket, and 70 USD is left in unclaimed yield

Percentage of Liquidity

This tells PowerPools to deposit to the bucket an amount that is proportional to the current total value of the liquidity in the pool every time the Rules are run. The actual amount deposited to the bucket will vary depending on the total value of the liquidity in the pool at the point that the Rules are run.

  • Example 1: Unclaimed Yield < Percentage of Liquidity Reinvestment Allocation
    • The total liquidity of the pool is 100,000 USD
    • Reinvestment Allocation is 0.50% of liquidity (i.e. 500 USD)
    • The Rules are triggered, and when the Reinvest action is executed there is 100 USD in unclaimed yield
    • Result: 100 USD is added to the Reinvest Allocation bucket, and there is no remaining unclaimed yield
  • Example 2: Unclaimed Yield > Percentage of Liquidity Reinvestment Allocation
    • The total liquidity of the pool is currently 100,000 USD
    • Reinvestment Allocation is 0.50% of liquidity (i.e. 500 USD)
    • The Rules are triggered, and when the Reinvest action is executed there is 600 USD in unclaimed yield
    • Result: 500 USD is added to the Reinvestment Allocation bucket, and 100 USD is left in unclaimed yield

All Remainder 

This option can only be set if Reinvest is set to be the final action triggered when running the Rules. If this is set, after all the earlier rules have been executed, PowerPools will deposit any unclaimed yield that remains into the bucket. 

  • Example 1
    • Reinvestment Allocation is set to All Remainder
    • The rules are triggered while there is 100 USD in unclaimed yield
    • Prior rules use up 60 USD in unclaimed yield
    • Result: 40 USD is added to the Reinvestment Allocation bucket, and there is no remaining unclaimed yield
  • Example 2
    • Reinvestment Allocation is set to All Remainder
    • The rules are triggered while there is 100 USD in unclaimed yield
    • Prior rules use up 100 USD in unclaimed yield
    • Result: nothing is added to the Reinvestment Allocation bucket, and there is no remaining unclaimed yield

Pool Protection

A pool that goes out of range stops earning yield, but you can counteract this by buying options strategies that offset this potential loss in revenue due to pools going out of range. The Pool Protection rule tells the PowerPools platform to use a portion of the yield earned by the pool to automatically buy options strategies to protect your investment.

Note: Due to the nature of the Pool Protection rule, you can set multiple instances of Pool Protection to run in your rules to manually build out an options strategy. e.g. Setting up 1 Call and 1 Put effectively builds a strangle.

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Allocation

Specifying Allocation tells the PowerPools platform to save a portion of yield earned in a bucket every time the rules are run. The saved amount will be used to buy protection for your pool each time the Pool Protection rule is run. If the amount does not meet the minimum amount required for buying the specified protection strategies, then the funds will remain in the Allocated Amount bucket.

Allocation can be specified in one of the following ways:

  1. USD
  2. Percentage of Yield
  3. Percentage of Liquidity
  4. Remainder

USD

This tells PowerPools to take an amount of USD (capped at a flat limit) from the unclaimed yield to add to the bucket every time the Rules are run. The amount deposited into the bucket each time will not exceed this flat USD limit.

  • Example 1: Unclaimed Yield < USD Pool Protection Allocation
    • Reinvestment Allocation is 50 USD
    • The Pool Protection rule is triggered when there is 40 USD in unclaimed yield
    • Result: 40 USD is added to the Pool Protection Allocation bucket, and there is no remaining unclaimed yield. No Pool Protection is purchased.
  • Example 2: Unclaimed Yield > USD Reinvestment Allocation
    • Reinvestment Allocation is 50 USD.
    • The Pool Protection rule is triggered when there is 60 USD in unclaimed yield
    • Result: 50 USD is added to the Reinvestment Allocation bucket, and 10 USD is left in unclaimed yield

Percentage of Yield

This tells PowerPools to take up to a percentage of yield earned by the pool to add to the bucket every time the Rules are run. The actual amount deposited to the bucket will vary depending on the amount of unclaimed yield at the point that the Rules are run.

  • Example
    • Pool Protection Allocation is 30.00% of yield
    • The Pool Protection rule is triggered when there is 100 USD in unclaimed yield
    • Result: 30 USD is added to the Drift Allocation bucket, and 70 USD is left in unclaimed yield

Percentage of Liquidity

This tells PowerPools to deposit to the bucket an amount that is proportional to the current total value of the liquidity in the pool every time the Rules are run. The actual amount deposited to the bucket will vary depending on the total value of the liquidity in the pool at the point that the Rules are run.

  • Example 1: Unclaimed Yield < Percentage of Liquidity Pool Protection Allocation
    • The total liquidity of the pool is 100,000 USD
    • Reinvestment Allocation is 0.50% of liquidity (i.e. 500 USD)
    • The Pool Protection rule is triggered when there is 100 USD in unclaimed yield
    • Result: 100 USD is added to the Reinvest Allocation bucket, and there is no remaining unclaimed yield
  • Example 2: Unclaimed Yield > Percentage of Liquidity Pool Protection Allocation
    • The total liquidity of the pool is currently 100,000 USD
    • Reinvestment Allocation is 0.50% of liquidity (i.e. 500 USD)
    • The Pool Protection rule is triggered when there is 600 USD in unclaimed yield
    • Result: 500 USD is added to the Reinvestment Allocation bucket, and 100 USD is left in unclaimed yield

Remainder

This option can only be set if Pool Protection is set to be the final action triggered when running the Rules. If this is set, after all the earlier rules have been executed, PowerPools will deposit any unclaimed yield that remains into the Allocated Amount bucket. 

  • Example 1
    • Pool Protection Allocation is set to Remainder
    • The rules are triggered while there is 100 USD in unclaimed yield
    • Prior rules use up 60 USD in unclaimed yield
    • Result: 40 USD is added to the Reinvestment Allocation bucket, and there is no remaining unclaimed yield
  • Example 2
    • Pool Protection Allocation is set to All Remainder
    • The rules are triggered while there is 100 USD in unclaimed yield
    • Prior rules use up 100 USD in unclaimed yield
    • Result: nothing is added to the Reinvestment Allocation bucket, and there is no remaining unclaimed yield

Protection Strategy

This allows you to choose from a selection of common options strategies to buy, the simplest of which are individual calls and puts. More strategies will be added in future.

Strike

This allows you to specify the Strikes of the contracts that PowerPools will buy on your behalf in two ways:

  1. Delta
  2. Upper/Lower Boundary

Delta

If you specify the Strike in terms of Delta, PowerPools will look for options contracts whose strikes are closest to your desired Delta. On the PowerPools interface, Delta is colloquially defined in multiples of 0.01, i.e. "30 Delta" is equivalent to a delta value of ±0.300.

Upper/Lower Boundary

If you specify the Strike relative to the Upper Boundary (for calls) or Lower Boundary (for puts) of your pool range, PowerPools will look for options contracts whose strikes are closest to the appropriate boundary of your pool's operating range.

Expiration

This allows you to specify the Expiration of the options contracts that PowerPools will buy based on your chosen strategy and your outlook for the market in the near, mid, or long term. The Expirations available are relative to when the rules are run, and you can choose expirations between 1 week and 2 years; the PowerPools platform will buy options closest to your specified time horizon.

Options Settlement

When ITM options are settled, the cash settled will be returned back to your yield.

Pool Reports

You can view the options that have bee purchased by the pool from the Pool Reports section within your pool details page.

Action Order

Once you have specified your rules, you can drag the action boxes around to re-order them, thereby changing the order in which your rules are executed. Tap or click Confirm to save your changes.

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Note that any rule with "All Remainder" allocation needs to be last in order, or you will not be able to confirm your changes.

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