> For the complete documentation index, see [llms.txt](https://cetra.gitbook.io/welcome/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://cetra.gitbook.io/welcome/cetras-products/market-making-strategy/the-key-concepts.md).

# The key concepts

The strategy's rule of thumb

You can think of the position in terms of 3 “sub-positions”:

1. We own **S** USDC as collateral and owe **X** WETH tokens and **Y** WBTC tokens to aave.
2. We own **X +- dx** WETH tokens and **Y -+ dy** WBTC tokens that are kept in UniV3 pool. Amounts dx and dy vary due to AMM design: the variability in essence causes Impermanent Loss.
3. We receive **F** — trading fees from UniV3 pool, **L** — lending return and need to pay **I** — borrowing interest. Usually revenue **F + L** significantly outweights expenses **I**.

Due to Cetra’s rebalancing mechanism, **dx** and **dy** IL variations are kept small and on position closing we own in pool almost exact X and Y to repay the debt (fee revenue is partly used to compensate the shortage).

After repaying we can redeem back our collateral S plus remaining fees converted to USDC, and enjoy the USD - notioned yield.\ <br>

<figure><img src="https://1285354018-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FNrZuwNA4KzQB3kUAXT8c%2Fuploads%2FjF474eMZv60Hrwi5tmTi%2F7224%20(1).jpg?alt=media&amp;token=87ed5307-e8e2-4b1a-932f-6179d83b5229" alt=""><figcaption></figcaption></figure>