In the dynamic world of decentralized finance (DeFi), strategies to optimize liquidity provision are always evolving. Recently, a new strategy known as the Anti-Sawtooth Strategy (AST)​ has been making waves within the LP (Liquidity Provider) Army, as highlighted in a tweet by MeteoraAG on X (link to tweet). Let's dive into what this strategy is all about and how you can implement it.

What is the Anti-Sawtooth Strategy (AST)?

The AST is designed specifically for tokens experiencing downward price action. The goal? To maximize the fees you earn by concentrating liquidity at the lower end of the price range. Here's how it works:

• Bid-Ask Positions: Normally, opening multiple bid-ask positions creates a 'sawtooth' pattern in liquidity distribution. AST aims to smooth this out by deploying more liquidity into the second position.

• Liquidity Distribution: Instead of an even distribution, AST focuses on creating a smoother bid-ask curve. This is visually represented in the accompanying images from MeteoraAG's post, which show how liquidity is shifted to optimize for lower price points.

Setting Up a Position with AST

Implementing AST involves a two-step process:

1. Initial Setup: Start by opening two positions using the standard Bid-Ask strategy, allocating about 80% of your liquidity here.

2. Curve Strategy: Then, add the remaining 20% of your liquidity into the second position but this time using a Curve strategy. This step ensures that you have a more fluid and optimized liquidity distribution across both positions, favoring the lower end of your price range.

Learning More: Guides from the LP Army

For those interested in a deeper dive, MeteoraAG has shared some valuable resources:

• Anti-Sawtooth Strategy for Dummies by @souei_nft provides a beginner-friendly guide on setting up AST (link to guide).

• Video Walkthrough by @tiiagoslb offers a visual step-by-step on how to apply this strategy in action (link to video).

Why Consider AST?

If you're looking to capitalize on fees in a market where prices are trending downwards, AST could be your go-to strategy. It's all about adapting your liquidity provision to the market conditions, ensuring you still profit even when the market isn't in your favor.

MeteoraAG encourages the community to share other strategies as well, fostering a collaborative environment for learning and growth in DeFi. If you have a strategy to share, tag MeteoraAG in your post!

This strategy not only helps in reducing potential losses but also in optimizing your returns in less favorable market conditions. With the right setup, AST can turn downward price action into an opportunity for profit.