Teahouse Simmer Toolkit (TeST)
Our Performance Simulation and Testing Toolkit
To measure the profitability of each strategy, Teahouse established the coefficient of profitability: the coverage rate divided by the average width of liquidity provision price range. In general, the superior strategy will have the greater "hit rate", where the spot price is "in-range", while also having a narrower range. Teahouse is able to track the time-weighted average coverage of an existing liquidity strategy, Alpha Vault, and calculate the effectiveness of its strategies with the entire 90822 swaps to date (as of 07/10/2021) in the ETH/USDC v3 pool.
time weighted average coverage (*)
average coefficient (**)
(*) share of swaps that fall within the positions while active (liquidity > 0), weighted by the timespan of the positions in active state
(**) the coefficient of profitability equals coverage divided by tick width