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I'm setting up a Kelp balanced strategy on StellarX, and so far I got it working and trading, but I'm very confused about the amounts that Kelp bids. It only seems to bid small amounts, fractions of XLM. My Account has ample funds, and I've even tried filling half the account with the other token, but I can't get the amounts that are bid any larger.

Is this normal or am I doing something wrong? Which variables of the Balanced strategy govern this, if at all?

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Kelp is pretty opaque. I cannot find any documentation that describes how the bot processes the balanced strategy config files in the pricing and amounts of bids and offers. I cannot tell what's going on in the bot's "mind".

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In the balanced strategy, the target amount of the bid uses the following formula:

targetAmount = (2 * availableAmount * spread) / (4 + spread)

and then reduce it by 5%. If you have multiple bid levels, then the availableAmount changes with increasing levels and the targetAmount decreases. The targetAmount for the balanced strategy cannot be controlled by any other configuration variable except the spread. But, if you increase the spread, then your targetPrice will also change.

For more details, see the code here.

As far as my understanding: If you want to control the order size, then you have to use the pendulum strategy. In balanced strategy, the mid market rate is obtained as assetA / assetB. So, a larger bid size will shift the balance leading to unrealistic bids and asks.

Edit: I downloaded the source code and modified the balanced strategy to include a configuration flag AMOUNT_MULTIPLIER to control the amount that Kelp bids. This is not suggested as it may lead to unrealistic bids and asks -- leading to significant losses in the market.

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  • Thanks so much, it's great to finally know how it works - appreciate that. No idea what the future holds for Kelp after AMM on Stellar, but hopeful.
    – JCee
    Nov 5 at 14:22

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