> For the complete documentation index, see [llms.txt](https://a51-finance.gitbook.io/a51-finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://a51-finance.gitbook.io/a51-finance/example-strategies/volatility-hedged-yield-maximization-strategy.md).

# Volatility-Hedged Yield Maximization Strategy

## **Objective:**

To maximize yield while hedging against extreme price volatility in a given token pair, say ETH/USDC.

ETH Price = $1,500

**Market Mode**

* **Bull Mode**: When ETH price rises by more than 5%, rebase the position to capture more of the upside.

**Rebasing Mechanism**

* Rebase Preference: 5%, liquidity needs to be in range.

**Exit Strategy:**

* **Reverse Liquidation:** Automatically sell all of USDC and convert it to ETH if it reaches $1,800.
* **Smart Exit**: Convert all of ETH back into USDC if ETH reaches $2,000
* **Exit Preference**: Automatically withdraw liquidity if the price of ETH drops to $1,300.

**Liquidity Distribution:**

* **Exponential Symmetrical**: Distribute the liquidity in an exponential symmetrical way.

**Additional Features:**

* **Farming Rewards**: Lock NFT received from liquidity provision to receive additional farming rewards.

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This strategy aims to balance the pursuit of high yields with risk mitigation, making it suitable for LPs who have a moderate risk tolerance and are looking for both capital appreciation and income.