Currently, a vast part of the crypto community is hyped up about the recent Uniswap V3 license expiry — the new era of forks is coming. Therefore, multiple DEXs across different blockchains are hard at work, offering crypto holders highly-efficient ways to capitalize on their crypto assets & find ways to raise their efficiency.
One of the solutions for that is the integration of the Algebra-built codebase. For the last couple of months, Algebra has been changing the DEX landscape dramatically, providing DeFi platforms, such as QuickSwap, Zyberswap, SpiritSwap, StellaSwap, Ubeswap, SkullSwap, Thena, and Nomiswap, with the truly innovative tech. But after all, who’s going to conquer the DeFi? What can Algebra offer to all market participants that cannot be found in Uniswap V3? Let’s find out.
Algebra: Overtaking Uniswap V3?
Uni V3, released in March 2021, provided two main innovations focused on capital efficiency. The first was concentrated liquidity, which allows liquidity providers to specify a range of prices within which their liquidity will be utilized. Recently, Uniswap V3 protocol became free to fork by developers as open-source software on April 1, when its Business Source License got expired. That fact allows a variety of decentralized exchanges to deploy their own DEXs using the CL solution, presented by the Uniswap Team. That basically means that new v3 forks will also spring up to compete with existing projects.
And then there are questions that must be answered; how will it affect the market globally? Will the efficiency of the concentrated liquidity algorithm be decreased by the numerous launches of Uni-forks? Is there a better solution for a DEX, looking for the V3 upgrade? Well, we have the answer for the last one, for sure.
Formerly known as a multi-solution DEX, and now, the DEX Engine, Algebra, has preserved and streamlined the concept of concentrated liquidity; adding up the unmatchable functionality. Powered by Algebra, the already integrated decentralized exchanges add up some diversity to the DEX landscape, increasing competitiveness in the market and giving users the chance to choose what is the best match for them.
Let’s break it down further and spell out the innovative topping that brings Algebra to the top of the list, and allows it to distribute its codebase to other projects, outperforming Uniswap V3.
Algebra — The Top-Tier Concentrated Liquidity Provider
- The Algebra Core — Dynamic Fees & Concentrated Liquidity
The main concept of the Algebra Protocol is to integrate the concentrated liquidity & adaptive fee mechanics into a DEX. For that, we have a ready-to-use code, consisting of these two breakthrough features.
Dynamic Fees:
Uniswap has 4 different pools for every pair with different fees, making the process of liquidity provision a quite tough one. What’s more, the fees are fixed. In reality, all liquidity is placed in one pool, meaning there is no point to go for another one.
Algebra, on the other hand, offers only 1 pool with a dynamic fee model which calculates the fee depending on numerous factors; including the risk, volatility, trading, and pool’s volume. Users can choose the custom price range options, and find the best conditions for liquidity providing. This way, price slippage, and impermanent loss are minimized thanks to the higher fees obtained by Liquidity Providers.
This way, Algebra Protocol and its integrated decentralized exchanges (the likes of QuickSwap V3, Zyberswap, Camelot, StellaSwap, Ubeswap, SkullSwap, Nomiswap, SpiritSwap, and a couple of the upcoming projects) care about our liquidity providers. Reacting to rapid changes in the current DEX landscape and considering the state of the market, we are creating technology that allows users to avoid large losses due to the so-called impermanent loss. That is our goal for the future release of version 2 of the Algebra protocol — to adapt our solutions to all possible circumstances and bring them to the top.
That’s what Uniswap V3 lacks, and that is what makes Algebra Technology so special.
Concentrated Liquidity:
The concentrated liquidity technology allows you to place your assets at specified price intervals, which allows for higher capital efficiency and deeper liquidity. What does this mean?
- You set a price range within which your assets will provide liquidity.
- You get a percentage of trading fees from the liquidity if the current price of the assets stays within this range. If you hit the right price range, your capital efficiency will be higher!
- As a liquidity provider, you have the ability and flexibility to independently adjust the conditions to minimize impermanent loss or even prevent it entirely.
- Higher capital efficiency can compensate for your potential losses.
If you ever provided liquidity on Uniswap V3 or any other DeFi protocol and experienced high impermanent loss, harness the power of Algebra; to help you minimize the risks of losing your capital.
Check out this ‘Understanding Impermanent Loss (IL) on QuickSwap’s V3 ‘Concentrated Liquidity’ Mode’ article, dedicated to the way Algebra reduces the Impermanent Loss with its DeFi solutions.
This image shows how the price range changes when you select these different custom price ranges.
2. The Built-in Farming Feature
We all know that Uniswap doesn’t have on-platform farming, so users have to apply to external smart contracts to farm tokens.
To improve this situation, Algebra has introduced built-in farming; allowing users to push their extra tokens to pools and earn rewards. You don’t need to access external platforms to farm and gain profit on your favorite decentralized exchanges, using the Algebra-built code.
With our farming feature built into our tech, users of all the integrated DEXs can earn rewards with the best APRs on the market, and boost their crypto’s efficiency easily.
These are the main points pushing Algebra to the leading position in the market.
3. The Rebase Tokens Support
The second version of the Algebra Protocol includes support for rebase tokens, which, in other words, are elastic supply tokens that have not yet been implemented by any other concentrated liquidity platforms on the market. This alteration improves support for rebase and similar tokens. The unaccounted excess balance is shared among active liquidity providers as a fee.
In fact, rebase tokens are underrated, and we see great potential in elastic supply tokens, and that is why we keep upgrading our tech to use them in a hassle-free way.
4. Limit Orders
This feature is designed to reduce price impact and provide new opportunities for market makers and traders, making the Algebra Protocol even more attractive to aggregators and regular users. The on-chain limit orders work based on ticks for CL, which makes it a perfect addition to our newer smart contracts.
Adding orders with a fixed execution price is a valid continuation of the ticking mechanism, and is probably going to be implemented by competing protocols in the future.
Algebra — The Future of Decentralized Finances?
Over the past 6 months or so, we’ve been showing some excellent results. When it comes to generating volume on different chains, you can clearly see we’ve created something truly revolutionary. In the days of a bull market, our TVL had reached the mark of $95M, while Volume comprised $211M by March 11th, and we’re striving to achieve even higher numbers with more DEX integrations!
Thus, our more efficient concentrated liquidity model requires less liquidity to make higher volume compared to other CL projects. It has been proven many times before, and it is still relevant even now when Algebra is known as the official source of one of the most innovative technologies on the market.
Besides that, Algebra aims to be a profitable project for its community: all the most loyal holders can stake their ALGB tokens, and get part of the dev fees, and commissions, acquired from the projects that are powered by the Algebra-made tech. Thus, we target not only creating the best DeFi solutions which we can further distribute among different projects but also rewarding our community, which has been here for us from the very start.
Learn everything about Algebra, and contact us to deploy a perfect Concentrated Liquidity DEX!
About Algebra
Algebra is a Protocol allowing projects to implement the Concentrated Liquidity tech, along with other groundbreaking features. Already integrated into Camelot, THENA, QuickSwap, StellaSwap, Zyberswap, SpiritSwap, Ubeswap, Nomiswap, SkullSwap, and more DEXs on different chains, Algebra helps them acquire higher volume & raise capital efficiency. Learn more on our website: algebra.finance.
$ALGB is the platform token of the Algebra Protocol, which can be staked, and used for governance, liquidity provision, and much more. The Algebra stakers get part of all fees acquired from the integrated DEXs in ALGB, while part of the commissions is used for buybacks, which strengthens the token itself. ALGB on CoinMarketCap.
