Core Protocol v2 & v3 DEX
Last updated
Last updated
The v2 DEX employs the constant product formula (x × y = k), which balances liquidity provision through automated protocols.
Liquidity providers contribute two assets in equal value to establish balanced pools, ensuring fair and efficient trading conditions.
Trades on v2 incur a 0.17% fee, which is distributed to LPs and automatically compounded into the position. This compounding mechanism enhances returns over time.
LP positions are represented by PLP tokens, which can be sent, traded or used in yield farming protocols for additional opportunities.
The v3 DEX introduces concentrated liquidity, enabling LPs to allocate their capital to specific price ranges rather than the entire price curve. This increases capital efficiency and yields.
The system supports multiple fee tiers (0.05%, 0.25%, 1%, and 2%), allowing LPs to tailor their strategies to their risk tolerance and expected returns. Generated fees can be claimed at any time.
Single-asset contributions effectively act as limit orders that become active within the selected price ranges, offering sophisticated liquidity strategies and risk management.
This model reduces slippage and provides higher APYs for LPs by optimizing capital deployment.
