$BTC
Explanation for "Binance Earn Alpha Station" through a real example:
Specific situation:
Input parameters Value
Token pair USDT – B
APY (annual interest rate) 101%
LP provided capital $1,000 USDT + token B worth $1,000
Total capital $2,000
Current price of token B $0.347
Selected price range $0.278 ~ $0.431 (price range for fee collection)
1. Calculate daily interest from APY 101%
=> 5.52 usdt\day
2. What happens when the price exceeds the range [0.278 – 0.431]?
+ Price exceeds 0.431 (too high) LP automatically sells all token B for USDT → you only have USDT, no more B
=> Price B increases to $0.50 for example → original value $1,000 token B is now ~$1,440 → total assets $2,440
=> you miss out on opportunity due to LP automatically selling B too early, however, still have actual profit
+ Price drops below 0.278 LP automatically sells all USDT for B → you only have token B, no more USDT
=> Price B drops to $0.24 → the amount of B you receive is worth ~$1,380 → total assets decrease
=> you incur actual loss
3. When the price fluctuates within the range [0.278–0.431]
+ the longer it lasts, the more you receive fees consistently each day (~$5.52)
Conclusion
Price fluctuates within range ✅ Receive fees ~5.52 USDT/day => WIN
Price exceeds $0.431 ❌ Stop receiving fees, only USDT left => WIN
Price drops below $0.278 ❌ Stop receiving fees, only token B left (may lose value) => LOSE
Price remains stable for a long time ✅ Accumulate fees → have actual profit => WIN
