LP Long

A creative way to establish a long position using LP with a built-in take-profit mechanism:

There are two types of positions a trader can take in a market: long and short - either buy an asset (going long) or sell it (going short). Rethinking impermanent loss exposure in a single sided LP position allows one to take such a position (long or short).

In a long (buy) position, a trader is hoping for the price to increase. An trader in a long position profits from the increase in price. In a long position, the potential downside/loss is the purchase price with an inherent stop loss. The upside is unlimited.

Example:

If I am long BTC, and buy BTC at $85k to supply to an LP pool with USDC in a single side pool (Not supplying USDC) then the position is long with the bonus of earning swap fees. Initial pool 100% BTC, 0% USDC.In order to create the single side pool, the position has to be at a higher price than the current tick.

Once the position is created, the position is out-of-range (which is fundamentally deactivated, incapable of earning fees or experiencing impermanent loss). As the tick (price) moves in range, the buying activity (volume as USDC) uses your positions BTC giving your USDC, which when you zoom out is take-profits DCA sales on a tick curve.

In the volatility of the market, while your position is still in range, the sale of BTC, returns the BTC to your position giving you USDC in return.

If your exit target is reached, your LP position will be 100% USDC and 0% BTC, effectively out of range.

Getting creative, you could estimate the moving average APY on swap fees and borrow additional BTC for a net arb making it a levered perp.