Automated Vault Strategies

Types of Strategies

When you deposit assets into a Horizon Liquidity Vault, the protocol uses those assets to provide liquidity on your behalf according to a predefined strategy.

The strategy determines three things: where your liquidity is placed relative to the market price, when it is repositioned as price moves, and how the trading fees earned are compounded back into the position.

All rebalancing and compounding is handled automatically by the vault. You do not need to actively manage the position.

In return, you receive vault shares representing your portion of the liquidity and the fees it generates.

Dynamic Range Strategy

The Dynamic Range Strategy positions liquidity within defined percentage bands around the current market price and automatically repositions liquidity when those thresholds are exceeded.

When price moves beyond the configured rebalance threshold, liquidity is withdrawn and redeployed around the new market price. This maintains alignment between the liquidity position and active trading conditions.

Range width determines the concentration profile of the strategy. Narrow ranges concentrate liquidity more tightly around the current price, increasing fee generation efficiency when price remains stable. Wider ranges distribute liquidity across a broader interval, increasing range durability during volatile conditions.

All fees earned are automatically compounded back into the position, increasing the effective size of the liquidity base over time.

Narrow range configurations may experience more frequent rebalancing and greater sensitivity to volatility. Wider ranges reduce rebalance frequency but typically produce lower fee density.

Stable Pair Strategy

The Stable Pair Strategy is designed for asset pairs that are expected to trade within a narrow price band relative to one another.

Liquidity is concentrated around the expected equilibrium price, allowing the position to capture trading fees generated by small, continuous price fluctuations. Range parameters are determined based on the observed stability characteristics of the asset pair.

For pairs with stronger price stability, liquidity may be positioned more tightly. For pairs with higher relative volatility, liquidity may be positioned across a wider interval to maintain consistent range coverage.

Fees earned are automatically compounded into the position. Asset balances within the position may shift over time if temporary deviations occur.

Pegged Asset Strategy

The Pegged Asset Strategy is designed for assets that maintain a defined relationship to an underlying reference value, such as staked or yield-bearing derivatives.

Liquidity is positioned around the expected reference price, allowing the strategy to capture fees generated by small deviations around that value. The position is automatically rebalanced when price moves beyond predefined thresholds.

This maintains alignment between the liquidity position and the reference value over time.

During periods of elevated volatility, the market price may diverge beyond the active range. When this occurs, fee generation may temporarily decrease until liquidity is repositioned.