🌐┃AMM V4

Camelot integrates the 1.2 version of Algebra Integral, offering a powerful, flexible, and user-friendly experience for traders and liquidity providers.

For any technical development details, please refer to the Algebra Documentation

Key Features

Algebra Integral (V4) is an innovative Automated Market Maker (AMM) that introduces a modular architecture to enhance the performance and flexibility of DEXes.

1. Concentrated Liquidity

   • Similarly to our AMMv3, LPs can allocate their liquidity to specific price ranges, improving capital efficiency and reducing slippage for trades within those ranges

2. Gas optimizations

   • All contracts have been extensively redesigned, leading to both gas savings and enhanced functionality for the protocol

3. New architecture

   • Liquidity storage has been separated from peripheral functionality modules (fees, oracles, etc...), keeping the critical functionality immutable while allowing non-core ones to be updated without any migration

4. Plugin Integration

   • Plugins enable developers to deploy custom (non-core) logic into pools. These hooks allow for advanced features such as dynamic fees, specialized incentives, experimental trading mechanisms, and many other things, providing unmatched flexibility and innovation potential

5. Support for rebase tokens

   • Unlike traditional concentrated liquidity AMMs, where tokens from rebase mechanisms remain stuck in the pool, Algebra Integral directly distributes these accrued tokens to liquidity providers

6. Custom pool creation

   • A key innovation in Integral is the introduction of multi-pool functionality for each token pair. This allows plugin developers to create unlimited pools, each enhanced with unique plugins, enabling unparalleled customization and flexibility

Plugins

Think of plugins as "add-ons" or "extensions" for a liquidity pool, similar to how apps enhance the functionality of a smartphone. They allow developers and protocols to introduce advanced features into a pool without overhauling the critical parts of the AMM.

The current beta stage of the AMMv4 will be used to test different plugin setups and configurations in order to optimize their settings.

The current set of plugins used by Camelot is the following:

1. Adaptive fees

• Allows to adjust the fees of a pool based on its volatility during the last 24h. More info about the calculations on https://docs.algebra.finance/algebra-integral-documentation/algebra-integral-technical-reference/plugins/adaptive-fee

2. Sliding fee

• Adjusts the fees on every swap based on the price change of the last block and the swap direction. It increases its value when the trade matches with the direction of the price change, and decreases it for the opposite direction. More info about the calculations on https://docs.algebra.finance/algebra-integral-documentation/algebra-integral-technical-reference/plugins/sliding-fee

3. Volatility and TWAP Oracle

• Stores timepoints and calculates statistical averages

4. Security

• Enables the option to halt a specific pool—or all pools—during emergencies

Many other plugins will be conceptualized and created over time, with some already in development:

1. Limit Orders

• Allows traders to set specific price points at which they want to execute a trade, similar to centralized exchanges

2. TWAP Oracles

• Provides Time-Weighted Average Price (TWAP) data directly from the pool, a critical feature for price feeds and smart contract integrations

3. JIT (Just-In-Time) Liquidity

• Enables liquidity providers to strategically add liquidity at the moment it's most needed, increasing efficiency and minimizing idle capital

4. Perpetual and Leverage Trading

• Expands the DEX’s capabilities to include advanced trading options, such as perpetual contracts and leverage

Custom Pools

Integral introduces the ability to create an unlimited number of pools for the same token pair. These pools are categorized into two types:

1. Default (or "official") pools: the standard pools provided by the protocol, that you will see by default and interact with on the frontend

2. Custom pools: user- or protocol-deployed pools designed for tailored use cases

Custom pools provide a unique level of flexibility, allowing deployers to customize their behavior according to specific needs. Each custom pool can feature its own fee structure and integrate custom plugins, enabling a wide range of use-case-specific optimizations.

Pool deployers can configure a plugin fee, granting them a share of the swap fees generated within their pools. This approach not only fosters innovation but also incentivizes the creation of unique and optimized liquidity solutions.

Why is it important?

• Flexibility: Offers users and protocols a choice of pools tailored to specific needs

• Innovation: Builders can test experimental strategies in isolated pools

• Robust Liquidity: Diverse pools create a dynamic and resilient trading environment

Some use cases

1. High-Fee Stability Pools: Ideal for risk-averse LPs focusing on steady returns

2. Low-Fee Arbitrage Pools: Attracts high-frequency traders and arbitrageurs

3. Experimental Pools: Builders can deploy unique plugins for targeted strategies

Utilize V4

V3/V4 Add Liquidity (concentrated)