🔥High Frequency Liquidity (HFL)

Highly concentrated fee generation from tight-range, fast 1min swapless rebalances

Disclaimer: HFL is an experimental, unproven, and rapidly evolving strategy. This is a “living & breathing” document that will constantly be updated based on new findings & learnings of HFL experiments. HFL is an advanced liquidity providing strategy for advanced LPers

What is High Frequency Liquidity (HFL)?

  • HFL is a Meteora DLMM automation strategy that provides liquidity at very tight ranges (eg 5-10 bins) while rapidly swapless rebalancing every 1 minute to constantly stay in-range for concentrated fee generation.

DEX selection

  • Meteora DLMM or Orca & Raydium CLMM

Token & Pool selection

  • IMPORTANT: Find tokens with HIGH VOLUME in HIGH FEE TIER pools

  • Target tokens trading upwards or sideways (not downwards). Rebalances amplify gains upwards/sideways, and losses downwards. Temporary dips are fine when fee-generation can catch up at reversals

Token Price Trend
Goal of HFL

⬆️ Upwards

Be net positive from token price growth and concentrated fee-generation

↔️ Sideways

Be net positive from concentrated fee-generation

⬇️ Downwards

Avoid LPing into a token in steep decline. Because rebalances amplify gains upwards/sideways and losses downwards.

However during temporary dips, there are cases when HFL mitigates IL during sideways trading or reversals, due to concentrated fee-generation.

In some cases of very high volume tokens, HFL fee-generation can offset or outperform IL from token price declines.

LP Duration & Take Profit Strategy

  • Typically few hours, or few days (ONLY IF volume is consistently strong for days)

    • Tip: Track 5min volume of tokens on Jup Pro or GMGN

  • In other words, HFL as long as volume is high

  • Use HawkFi Stop Loss automations to mitigate downside risk of token price declines

How to do HFL?

Step
HawkFi automation
Purpose

1

Deploy tight 7-11 bins single-side liquidity at local bottoms of price (In other words: Enter at price dips)

Maximize upside and minimize IL from token price bottoming further

2

1 minute autorebalance, follow price up or down

Constantly stay in-range by rapidly rebalancing every 1 minute to generate fees

3

Swapless “No swap” autorebalances

Maximize yield by avoiding DEX swap fees for frequent rebalances

4

Match “New price range after rebalance” to number of bins in Step 1

Maximize fee-generation by concentrating LP tightly around market price of token

5 (Optional)

Stop Loss, with auto-swap to SOL

Mitigate downside risk by setting a stop loss trigger that closes the LP position and auto-swaps to SOL

HFL Case Studies

Tutorial Videos

FAQs

  1. Why is my position not autorebalancing every 1 minute?

Potential reasons:

  • Liquidity position is in-range. Rebalances only trigger when position is out-of-range

  • There are no (zero) trades occuring in the pool. Rebalances only trigger when trades occur in the pool. Pools typically have infrequent trades when it has low volume or flows

More Questions?

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