Simulations reveal how long liquidity providers will remain in a position given market dynamics

Modeling the probability of the price moving outside a liquidity provider’s range given a certain drift and volatility is crucial for understanding the risks of LPing and optimizing the range. A Laplace distribution does a better job than a Gaussian at capturing the “expected move” of most LP pools, and simulations show how long we can expect to be in a position given the market dynamics.