Simple LP hedge strategy

I’d like to share my simple LP hedge strategy.

LPs typically work like this: suppose I open a position in a liquidity pool (LP) with a total of X bitcoins worth Y USD. If the price rises, I end up with more USD than I originally had, but each bitcoin is more expensive - so if I convert, I’ll end up with fewer bitcoins than originally. If the price falls, I end up with more bitcoins than originally, but bitcoins are cheaper - so if I convert, I’ll have less USD.

If my goal is to preserve my bitcoin amount instead of my USD amount (which is preferable in bull markets), my strategy is:
1. Open an LP position. If the price falls, convert the excess bitcoins into E USD.
2. On the next LP position, open a long position on a perpetual contract with a size of E USD. This is the hedge.

If the price falls, I lose my perp position partially or entirely, but that’s okay because I’m preserving my bitcoin balance - that’s my goal. If the price rises, the profit from the perp helps maintain (and possibly increase) my bitcoin balance. It’s not exact math, so my bitcoin balance may increase more or less than expected, but it should help anyway.

Throughout the process, the fees are paid from the LP.

The opposite is also possible, to preserve USD instead of bitcoin, also can be applied in pairs of crypto.