Alcor Swap AMM v2: Introducing Concentrated Liquidity on the WAX Blockchain

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Published in
3 min readMay 1, 2023

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This article is published on behalf of Alcor.

Next-Generation Trading Experience on the WAX Blockchain

Alcor Exchange is thrilled to introduce Alcor Swap AMM v2, their latest innovation that brings the power of concentrated liquidity to the WAX blockchain. Designed with Blockchain, Tech, and DeFi enthusiasts in mind, this cutting-edge feature revolutionizes liquidity pooling, providing significant benefits for both liquidity providers (LPs) and traders. Let’s explore concentrated liquidity, how it functions, and its transformative impact on the WAX blockchain.

The Game Changer: Concentrated Liquidity

Concentrated liquidity is a game-changing concept that distributes liquidity within specified price ranges, instead of evenly across infinite price intervals. This unique approach allows liquidity providers to accumulate their capital in smaller price intervals, leading to individualized price curves, heightened capital efficiency, and deeper liquidity for traders. Consequently, it tackles the inefficiencies and unpredictable losses associated with traditional pools.

The Mechanics: How Concentrated Liquidity Operates

By enabling LPs to contribute liquidity to specific price ranges, concentrated liquidity revolutionizes liquidity pooling. When the price falls within a certain range, the liquidity in that range starts accumulating trading fees. LPs receive a share of the total fee amount proportional to their contribution to the overall liquidity within that price range.

As the price fluctuates, the aggregated liquidity of all positions covering the current price is used to facilitate trades. This innovative model empowers LPs to allocate their capital to preferred price intervals, optimizing liquidity utilization. Simultaneously, traders experience deeper liquidity where it matters most, and substantial profits due to reduced slippage.

The Ultimate Control: Range Orders

Alcor Swap AMM v2 features range orders, allowing LPs to deposit a single token within a specific price range. When the market price enters the chosen range, LPs can sell one asset for another, earning swap fees. This groundbreaking feature grants LPs unparalleled control over their trades.

Risk Management: Multiple Fee Tiers

Understanding different risk appetites, Alcor v2 offers three commission levels per pair — 0.05%, 0.30%, and 1.00%. This variety empowers LPs to select the level that best aligns with their risk tolerance, considering the volatility of the pair.

Reliable Data: Price Oracles

AlcorSwap v2 ushers in the creation of on-chain price oracles called time-weighted average price (TWAP) oracles. These highly decentralized oracles provide a robust solution for the challenges associated with crafting reliable blockchain protocols.

The Future of Liquidity on the WAX Blockchain

By introducing concentrated liquidity to the WAX blockchain through Alcor Swap AMM v2, we are revolutionizing liquidity pooling and elevating the trading experience for both LPs and traders. By addressing traditional liquidity pool inefficiencies and offering greater flexibility and control, Alcor Exchange is paving the way for a more efficient and effective ecosystem. Blockchain, Tech, and DeFi enthusiasts, it’s time to experience the future of liquidity on the WAX blockchain!

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WAX io
WAX.io

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