Arbitrum’s cheapest AMM: Welcome to Long Tail
Only possible on Stylus
This is the second post in a series on Superposition called the “Road To Superposition”. Read the first one here
Superposition has built Arbitrum’s cheapest and most rewarding AMM. We call it Long Tail, and it is just the first app of many on the Superposition Layer-3, the blockchain that pays you to use it.
Using Arbitrum Stylus, the team has built a concentrated liquidity AMM that is roughly 4 times cheaper than Uniswap V3. And that’s not it — it’s also the first AMM that pays you to use it. It is the world’s first “fee-negative” AMM, with zero protocol fees. Built on Super Assets (powered by Fluid Assets), every single swap is a yield-bearing transaction. Get paid for making swaps and providing liquidity!
The following gas in the graph below is used for 1 to 1 swaps (without permit router). Comparisons were made using historical data for AMMs excluding Long Tail, and a random dataset of mints/swaps on Long Tail:
Long Tail is the cheapest DEX on Arbitrum by far, beating Uniswap V3 by a margin.
How?
Superposition is building on the shoulders of giants. Stylus is Arbitrum’s big bet on the future — Rust powered smart contracts that are 10x less costly than Solidity. Rust is a secure systems programming language leveraging the LLVM toolchain for a high level of optimisation. The Arbitrum team is always pushing the envelope — that’s why Arbitrum is DeFi’s home.
Super Assets are yield-bearing wrapped assets. Every Long Tail pool’s base asset is fUSDC — an asset that generates yield on every transaction, every time. It does so by taking the underlying collateral, and supplying it to a lending protocol (think, AAVE). In making a swap and any kind of transaction, you receive exposure to fUSDC rewards, benefitting from it’s yield properties.
That’s why it’s possible to build a fee-negative AMM that earns LPs rewards — they receive a part of the rewards that would be paid per transaction with the Super Asset. We have shown in our whitepaper that LPs will receive similar or even larger rewards than on currently existing products, even with no LP fees charged.
In another example, consider the following graph showing PnL differences between a regular LP position and a Super LP position using historical data on the ETH price from 2023. The regular V3 PnL in green is 10%, while for the Long Tail PnL in yellow it is 15%, an increase in 5% for the duration of the LPs position. Long Tail presents a better hedge against Impermanent Loss, while charging zero LP fees, making it not just more attractive for LPs, but traders alike.
The graph is assuming $3M in annually generated interest, and a lower and upper boundary for the LP position of 1200 and 2300 fUSDC per ETH. The data has been gathered from Dune Analytics.
What’s next?
Long Tail is not only Arbitrum’s most affordable and rewarding AMM, it’s also built on Superposition, the Blockchain L3 that pays you to use it. Superposition is currently in Devnet. The AMM will launch on the Devnet on day 1, with access made available to selected partners. Later, it will be made available on Arbitrum Mainnet as well.
Join our discord to be the first to know once the AMM Testnet goes live for everyone.
For the testing methodology on the presented data we’ll be making it accessible soon. Our scratchpad for this research is available on request as we tighten up the presentation. A historical data collection was performed to collect the data on Arbitrum by collecting swap events, then taking the median posting and computation fees. A final part of this series will be released showing how not only Long Tail is Arbitrum’s most rewarding AMM, but that it’s also the most rewarding AMM in the entire EVM space.
Only possible with Stylus and Superposition.
Editor’s note: The Dencun update reduced the gas fee for posting. We expect the gains for Long Tail to other AMMs to be linear despite this.
How can I participate?
- Check out our website: https://superposition.so/
- Follow us on X: https://x.com/superpositionso
- Join our Discord: https://discord.gg/superposition
- Build on Superposition: https://vwteejwljio.typeform.com/to/ayepRKkR
- Reach out to us at contact@superposition.so
