Inventing Ranges pt. 2
Qualitative study of the first MEGA RANGE performance and what it means for my Ranges invention.
A few weeks ago I released an article explaining the concept of an innovative DEX model which we called RANGES. Meanwhile, together with the team we’ve been testing it in real life by launching multiple ranges on the Waves blockchain using Puzzle Swap infrastructure. Out of those ranges, one was especially successful and good at showcasing the power and specialties of RANGES math, so I did a whole qualitative study about it.
I deposited 100 bucks into range to specifically research the 3 main aspects:
1. APR, based on the rewards earned from trading commissions, in its classic interpretation together with what I called “Clean APR” with Impermanent Loss deducted and “Upside APR” including the annualized growth of liquidity value.
2. Impermanent Loss, which I previously estimated to be minor in the ranges thanks to the token diversity but never had proof for it.
3. Min/Max Prices change during time with token volatilities; as I explained in the previous article, they shall volatile if there are more than two tokens in the range.
After almost a month of holding liquidity in the range I was able to conclude the research and present its outcomes in this article. Enjoy the reading!
MEGA RANGE setup
This particular range was named MEGA RANGE. By its setup it has 6 tokens in composition: WBTC, ETH, USDT, USDC, WAVES and ROME, which is a Waves-native stablecoin, not really well pegged one though.
It only had 2 liquidity providers: myself and our friendly whale — and the supply amounts haven’t changed during the experiment which makes the outcomes much simpler to compute.
Interestingly, there was a significant volatility of ETH in the meantime. To put it simple, ETH just skyrocketed through the roof and, consequentially, through the max price threshold of the range.
Besides ETH, the WAVES token was also volatile and spent some time out of the range zone. It made the outcomes of my little research study even more conservative and stress-tested.
Outcomes
As I stated in the intro, 3 main aspects were measured after 26 days: APY (APR), IL and Min/Max Prices volatility.
Let’s start with Impermanent Loss as the most intriguing one.
#1 IL
Impermanent Loss is a relative loss in USD, which is measured by how much would Liquidity Provider have in USD, would they just keep assets in their wallets instead of the pool. In traditional pairs, even with 20%+ APR, liquidity providers can still be in de-facto loss because of that IL.
It’s called “impermanent” because it may disappear if the assets prices go back to the initial values and isn’t usually displayed in any DEXes UI.
I calculated the IL by comparing the current USD value of position ($101.17) to what the initial position would cost with current asset prices ($103.06). $103.06 — $101.17 = $1.89 — impermanent loss in LP position. It’s mostly caused by ETH price growth: in the initial position LP had 0.0026 ETH which would currently cost $12 but in fact were converted at about $10.50. Same goes to IL caused by WAVES price.
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$1.89 seems like an affordable IL compared to how much LP actually earned: $3.90 are available to claim. Which leads to the first outcome of this research: IL is minor compared to EARNINGS.
#2 APY / APR
Even with one or two tokens being out of the range for 90% of the time, Range kept performing and generating revenue for the liquidity providers, totalling 5692 usd.
The LP from my study earned $3.90 purely from swap fees for a $99.54 deposit in 26 days. We can use it to calculate APRs and APY.
Annualized Percentage Rate (APR) for LPs is 365 * 3.90 / 26 / 99.54 = 55%.
Being compounded daily, this position would generate: (1 + 0.55 / 365) ** 365–1 = 73.25% — this is an APY.
Additionally, to give a broader perspective I calculated the following.
“Clean APR” — with IL being deducted from EARNED = 365 * (3.90–1.89) / 26 / 99.54 = 28.3%.
“Upside APR” — with position growth being added to EARNED = 365 * (3.90 + 101.17–99.54) / 26 / 99.54 = 77.9%.
#3 Min/Max price volatilities
While 4 assets stayed in the range for all of the time, ETH and WAVES got out of it because of their own volatility but also because of Min/Max Prices dynamic changes.
As mentioned above, ETH got out of the range pretty fast, 12 days after the launch, and almost never came back into it.
Besides the fact that it was expectable with ETH market price fast growth, the question remains of why the Max Price did significantly lower with time, especially on 09/08/2025, sharply falling from 4600 to 4400. Fortunately, we have enough data to guesstimate the answer: sharp ETH max price decrease is caused by WAVES’ green candle on 09/08/2025 when it grew from below $1.10 to $1.21 in just a few hours.
This leads to the following outcome: a sharp increase of price of one asset in composition decreases the max prices of other assets.
However, we need much more details to answer the following: (1) does the decrease of price have an opposite reaction? (2) to which extent does the weight of a token in the pool matter? (3) what if two tokens make exactly opposite price movements at once (eg, one falls 10%, other one rises 10% — what will happen to others’ ranges).
All of these questions should be answered to optimize Ranges usage, and I leave them for further quantitative research.
This little qualitative study brought some insightful outcomes:
- APR is proved to be high, extremely high compared to competitive DEXes: MEGA RANGE performed with 73% APY,
- IL is relatively minor, “Clean APR” is 28% and would be more with holding liquidity longer,
- There needs to be more research in order to analyze Min/Max Price movements and optimize the usage of ranges with more than 2 tokens.
As a next step we did a whole Alpha Test for our users getting more than 80 new ranges and, hence, enough data to proceed with the research… However, that would be another story ;)
A cool side effect of the MEGA RANGE experiment is getting a decent volume ($2m volume in one range, wow!) and protocol fees totalling $5,692 which was distributed to PUZZLE stakers. Stay tuned for more content on Ranges, our attempt to build a sustainable DeFi!
PS. The next morning after I wrote this, ETH price corrected and it’s now back into price range. What a coincidence!
