Based on a study of 11 different liquidity pools (ranging from 2 to 10 tokens, with varying compositions and lifecycle durations), the following conclusions were reached:

• In 2-token pools, price impact is significantly more pronounced compared to multi-token pools
• Growth of low cap tokens can be considered an advantage (positive slippage)
• Tokens with low trading volume and insufficient liquidity reduce overall APY
• Small pools (< $5k) generate lower returns, because there are no major transactions going through them
• Stable pools with high leverage (x100) provide more consistent but not maximum APR

Conclusion:
A higher number of tokens in a pool expands the space of strategies and potential yield scenarios
However, without proper analysis of pool composition and parameters, it may lead to reduced efficiency. Therefore, careful token selection and range configuration aligned with market conditions is required

Source: https://medium.com/@izhur27/inventing-ranges-pt-4-quantitative-research-dc7fc95c0241

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