Introducing Algebra Integral: Benefits for DEXes
Outline:
- Introduction
- About Algebra Integral
- Benefits for potential partners
- Integral vs Uniswap V4
Introduction
Existing technology inside DEXes can quickly become outdated, failing to keep pace with DeFi trends, resulting in low liquidity effectiveness. To ensure rapid evolution in the DEX space, a solution is essential to expand functionality in line with market trends. In recent years, new solutions and algorithms have emerged for more efficient liquidity management, dynamic fee adjustments, and trading possibilities.
For timely access to these innovations, we created Algebra Integral, the leading concentrated liquidity engine with a unique modular architecture, providing an effective solution to the above challenges with a light core with key functionalities & custom plugins.
The concept of the Algebra Integral version is based on the separation of pools and additional functionality, employing a modular architecture. Algebra Integral represents a modern approach to concentrated liquidity, enabling the seamless integration of plugins on top of liquidity pools.
So, what’s it going to mean for a potential partnering DEX?
By integrating the Algebra technology, DEXes can pioneer in collaborating with external developers to build plugins, and updating the codebase without any disruption for users. Not to mention the gas efficiency for all, achieved with a myriad of features Algebra offers.
Algebra’s primary motivation is to create a platform for projects to bring their innovative ideas to life, and this collaboration has the potential to transform the DeFi landscape, offering more than just a DEX engine but an entire infrastructure.
About Algebra Integral
Algebra ‘Integral’ is an advanced solution for decentralized exchanges that introduces a Modular Architecture with custom plugins, reinventing the way DEXes operate. Integral divides the previously monolithic infrastructure into two essential components: the Core Codebase & Plugins, which play a crucial role in enhancing the efficiency, security, and adaptability of DEXes, competing with the Uniswap V4 approach.
The Core code of Integral is the heart of the platform, hosting the fundamental features necessary for DEX key functionality. It manages liquidity pools and the basic mechanics of DEX operations, serving as an immutable and unchangeable core to ensure the security of users’ funds. This Core code minimizes gas wastage, streamlining gas costs and increasing efficiency. Read more here.
In Integral, plugins expand DEX functionality & address codebase’s inflexibility issues. These custom plugins introduce features like Dynamic Fees & On-chain Farming, empowering DEX DAOs to tailor functionalities to their needs. Updates are hassle-free, no liquidity migration required, offering adaptability to DeFi trends.
Integral also includes ready-to-use Plugins: TWAP Oracle for historical data, Volatility-based fees, and Farming for seamless Farming functionality.
Let’s break it down further:
- Volatility-based Fee Plugin boosts commission earnings for LPs by up to 20% through an algorithm that adjusts fees based on risk, volatility, trading, and pool volume. This minimizes price slippage and impermanent loss for Liquidity Providers.
- Built-in On-chain Farming Plugin lets users earn rewards directly within the DEX, eliminating the need for external platforms. Available as an Integral plugin, it enhances profit opportunities.
- The Limit Orders Plugin lets users place a limit order that will be executed automatically when a specified price is reached (no external calls required).
Learn about the way our plugins operate on top of a liquidity pool, here.
Integral’s innovative approach to DEX architecture and its extensible plugin system pave the way for future developments, including the introduction of the following features:
- Dynamic & elastic fees
- A whitelist / blacklist / KYC system
- Gas discount, or compensation mechanisms
- Solutions for JIT liquidity issues
- LVR (Loss-Versus-Rebalancing) / Impermanent Loss reduction
- Perpetual Contracts
And even more in the future.
For more detailed technical details, visit this link.
Benefits for a partnering DEX
The implementation of Algebra Integral technology offers DEXes numerous advantages. The final goal of a potential integration is significant increase in TVL, trading volume and overall efficiency, which will be followed by a platform’s revenue growth:
- Gas Efficiency:
Integral’s optimized core saves 7–22% on gas costs on average compared to Uniswap V3.
- Modularity & Customizability:
Plugins make it possible to implement new functions without liquidity migration, allowing a DEX to achieve the top of its competitiveness. Integral’s customizability allows a DEX to optimize its performance for each blockchain.
- New Revenue Streams:
Integral unlocks a broader range of revenue opportunities. The introduction of plugins provides chances for more stakeholders to engage. Imagine, for instance, dedicated plugins for automatic buybacks, exclusive LP fee structures for entry/exit, giving them 100% of fees, or even plugins to mitigate impermanent loss.
Integral vs. Uniswap V4
The main competitor of Integral will be Uniswap V4 with the same modular concept. Because of the business license, it will be impossible to fork it, currently making only Algebra Integral-based DEXes and Uniswap V4 competing with each other. Here is how V4 and Integral differentiate from each other:
- Philosophy: Uni V4 allows anyone to create a plugin and launch it on their pool, resulting in the possibility of many pools for one pair leading to liquidity fragmentation. Integral, on the other hand, does not grant these rights to just anyone; DEX administrators or the DAO control plugin setup, with one pool for one pair, thus, eliminating liquidity fragmentation issues.
- Singleton: Uni V4 consolidates all liquidity in one contract, while Integral keeps pools separated. Singleton is more efficient for multihops and pool creation but carries the risk of having all tokens in one place. Also, the advantages of Singleton can be covered with multiple plugins connected to one pool: this will be possible thanks to the currently developing Proxy Plugin.
- Uni V4 is not currently available and is awaiting an Ethereum hard fork. There are no plans for other networks; it won’t work on other EVMs automatically. In contrast, Integral has proven plugins like Farming and Dynamic fees.
- The main difference is that we provide the ability to change hooks on top of the pool. As the original idea is to eliminate fragmentation, we offer the option to change these hooks on top since they may become outdated or simply unnecessary. This way, DEXs don’t need to migrate liquidity to new pools when making updates. Additionally, there is also the possibility to place not just one but multiple hooks on top, following all the necessary security procedures.
Additional Information
Integral was launched on October 10th and has been integrated into the Swapsicle DEX on two chains: Telos and Mantle. This partnership has already resulted in over $1 million TVL and has garnered the attention of other projects looking to build on top of Integral. Several more partners are set to release with Integral in the coming months.
Integral, which has undergone audits by partners, is already making waves in the DeFi community. The core functionalities of Integral have been thoroughly tested and are ready for use, and the custom plugins have been tested by thousands of users.
About Algebra Labs
Algebra is a dedicated team that specializes in research and development within the Automated Market Makers (AMM) space. In 2021, as a DEX solutions team, we made a significant impact by launching the first decentralized exchange with improved dynamic fees and built-in farming features, distinguishing itself from other platforms.
Algebra has established successful partnerships with more than 25 decentralized exchanges, encompassing notable names like QuickSwap, THENA, Swapsicle, Camelot, SwapBased, and others. This collaboration has resulted in a total TVL of $120 million, and they are continuously expanding their network of partners.
At present, Algebra is a technology leader. Even before the launch of Integral, our prior iteration, Algebra V3, had already achieved remarkable success and held a prominent position on various networks, including Polygon, Arbitrum, Polkadot, BNB, and more.
We have empowered over 60 projects, including ALMs, cross-chain aggregators, and more, with cutting-edge technology integrated via Algebra-powered DEXes. The Algebra ecosystem aims to bring innovation and healthy competition to the DEX market, offering modern DeFi solutions like the Concentrated Liquidity codebase, including V3 & V4-like Integral, for reshaping any blockchain’s DEX landscape.
