2026-01-16 05:25:48

Recently, I discussed some fundraising situations for quantitative funds. The most impressive one was a strategy focused on Aerodrome liquidity market making, with an annualized return of over 60%. More importantly, this scheme experienced virtually no significant drawdowns, and risk control was quite solid.

Because the fundraising party could control the risk, they took a substantial share of the profits, taking 45% of the returns, leaving the LP with just over 30% annualized. Honestly, this number is still quite good in the current market.

On the other hand, arbitrage strategies in the market are quite interesting. Many quantitative teams doing arbitrage only earn about 10 or so percentage points per year, and reaching 20% is considered quite good. The gap is so large—on one side, the liquidity advantage and clear profit model of market making; on the other, the arbitrage space itself is narrowing year by year.

I’d like to hear your thoughts on this—have you come across reliable quantitative strategies? Especially those that can consistently generate good returns while keeping drawdowns manageable. Have these types of strategies become more competitive in the past two years?

AERO-3,37%

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

11 Likes

Reward
11
5
Repost
Share

Comment

0/400

NFTregretter

· 01-19 01:38

Huh, 60% annualized return with no drawdown? I always feel like it's a bit suspicious... Market making is indeed more attractive than arbitrage, but a 45% cut is really harsh. Arbitrage is getting more competitive, and there really aren't many good opportunities left anymore.

View OriginalReply0

AltcoinHunter

· 01-17 09:17

Annualized 30% for LPs? That number sounds comfortable, but I always feel like something's off... Taking 45% of the profit so aggressively, is it really excellent risk control or are they laying in wait for some black swan? I agree that arbitrage is becoming more and more difficult, but 60% returns... brother, if it could really be consistently achieved, big funds would have already gone all in, right?

View OriginalReply0

NewDAOdreamer

· 01-16 05:52

Annualized 30% for LP? This profit-sharing ratio is really aggressive, but proper risk control is indeed valuable. Arbitrage has long been highly competitive now, with bots executing instant trades, so individuals have no chance at all. I'm actually interested in understanding more about Aerodrome's liquidity. Can someone break down the specific logic? Almost no 60% drawdown? That would require a very stable model, which seems a bit unrealistic. Market making is indeed more attractive than arbitrage, but where exactly are the risks? Has it been tested during market crashes? I just want to know how long this strategy can be held. Once the liquidity pool dries up, is it game over?

View OriginalReply0

rugpull_survivor

· 01-16 05:50

The 60% annualized figure... to be honest, it's quite attractive, but a 45% profit share is also pretty impressive, huh? Arbitrage is getting more and more competitive, it feels like it's reaching the limit. It's really hard to find stable strategies nowadays; most are monopolized by large institutions. Aerodrome's liquidity market making is indeed more aggressive than arbitrage; is such a big gap reasonable? An annualized 30% sounds good to LPs, but I still have some doubts. In the past two years, the quant track has become extremely competitive; small players really can't get in. Solid risk control strategies are everywhere; the key is whether the profit share can be negotiated.

View OriginalReply0

4am_degen

· 01-16 05:49

Providing an annualized market-making return of 60% while controlling drawdowns? That requires incredible stability, honestly it's a bit hard to believe. Arbitrage is indeed becoming more and more competitive, the room for profit is so limited. The liquidity opportunity with Aerodrome is real, but a 45% split is really harsh. A 30% LP yield is definitely noticeable now, but I'm worried the strategy might fail later. The biggest risk in quantitative strategies is sudden drawdowns; no matter how good the risk control is, it can't prevent a black swan. I've come across a few, but truly stable ones are few and far between; most just look good in the early data.

View OriginalReply0