Sui and Aptos new protocols lead centralized liquidity DEX innovation

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Centralized Liquidity Protocols in the Sui and Aptos Ecosystems: In-Depth Analysis

A new centralized Liquidity protocol has emerged in the Sui and Aptos ecosystems, which is built using algorithms similar to a well-known DEX V3 to create a centralized Liquidity protocol along with a series of ancillary functions, aimed at providing DeFi users with the best trading experience and higher capital efficiency. At the same time, the protocol also leverages the unique ecological characteristics of Sui to create some composable features that are different from traditional DEX.

A Comprehensive Guide to the Centralized Liquidity Protocol Cetus on Sui & Aptos

The Target Audience of DEX

Although the on-chain cryptocurrency trading market is relatively small in scale, its total volume is growing rapidly. The biggest characteristic of this market is that the vast majority of assets belong to the low liquidity, low market cap category, and new assets are still being generated in large quantities every day. In such a market environment, how to better achieve price discovery to attract liquidity becomes the key to the prosperity of on-chain trading. Therefore, the primary target of DEX should be liquidity providers (LP).

The demand for LPs in different trading scenarios varies. We can roughly categorize on-chain assets into two types: mainstream assets (the top ten assets by trading volume on major public chains) and long-tail assets. The LP demand for these two types of assets differs.

  • Mainstream LPs: Pursue more fee income and reduce impermanent loss
  • Long-tail asset LP: requires a cheaper, controllable, and flexible market cap strategy

In the long run, the V3 model with higher capital efficiency is the trend of the future, but due to differences in demand, both V2 and V3 models can still coexist. The market will inevitably give rise to new players that can cater to both demands. In an emerging ecosystem like Sui, this new protocol may become a more formidable competitor.

Main Features of the New Protocol

The protocol has currently developed a complete product line including Swap, permissionless Liquidity pools, and cross-chain bridges. Here are its main features:

Concentrated Liquidity

The protocol employs a centralized liquidity market-making algorithm similar to that of a well-known DEX V3. LPs can create multiple positions in the same pool by setting different price ranges to implement customized strategies. This approach allows LPs to earn more trading fees and improve capital efficiency.

Permissionless Pool Creation

Users can create liquidity pools without permission, and new projects can directly launch new tokens on the platform. This helps attract early projects and quickly establish pricing power for long-tail assets.

Flexible trading fees

The protocol allows for the setting of multiple tiers of transaction fees (0.01%, 0.05%, 0.25%, 1%), and the same token can have pools with different fee levels. This design encourages the market to find the most suitable liquidity allocation scheme on its own.

Position Auto Management

Users can implement take profit orders and limit orders based on range orders. In addition, users can also use third-party position managers for management, reducing the difficulty of liquidity management and facilitating long-tail asset LP.

Composability

The protocol supports high composability, allowing other project teams to easily establish exchange interfaces in their own front end by integrating the SDK, quickly accessing the protocol's Liquidity.

Secure Cross-Chain Bridge

The cross-chain bridge created based on the Wormhole protocol went live last November, allowing users to safely and conveniently transfer assets across nearly 20 public chains.

Strongly correlated token economic model

The protocol adopts the xToken economic model. By holding the native token and xToken, users can receive a share of the protocol's profits, ensuring that the interests of the community and the protocol are aligned.

A Comprehensive Explanation of the Centralized Liquidity Protocol Cetus on Sui&Aptos

Team Background

The team behind the protocol has mature experience in developing centralized liquidity market-making algorithms. Their Aptos version has been deployed and is operating stably. Given the assurance of the product, strong BD capabilities within the ecosystem, and the ability to maintain a continuous narrative in operations, the team is expected to achieve a leading position in centralized liquidity infrastructure on Sui.

Innovations in DeFi Brought by Concentrated Liquidity Protocols

LP Automated Liquidity Management Protocol

This type of protocol can help LPs automatically execute market-making strategies, addressing issues when market prices exceed the strategy range. It can also enable unilateral asset LP mining and issue liquid, collateralizable ERC20 LP tokens for LP providers.

New Gun Pool and Leveraged Mining

Under the centralized liquidity algorithm, the capital advantage is amplified, allowing professional institutions to implement more customized strategies. The gun pool can adopt an active and robust strategy to generate returns, which holds immense value for large-scale users.

New Derivatives System

How to construct derivatives that can hedge against LP market-making risks to buffer the damage to LP interests caused by malicious project dumping is a new track worth paying attention to.

A Comprehensive Analysis of the Centralized Liquidity Protocol Cetus on Sui&Aptos

Summary

The team demonstrates mature product delivery capabilities, strong business development abilities within the ecosystem, and operational capabilities. They have a profound and unique understanding of the DEX product and sector. Within a unique ecological track like Sui, this protocol has high potential to become an industry leader.

A Comprehensive Analysis of the Centralized Liquidity Protocol Cetus on Sui&Aptos

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TrustlessMaximalistvip
· 08-10 11:40
What is there to say about copying v3?
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WhaleWatchervip
· 08-10 11:38
What's Aptos up to again?
View OriginalReply0
defi_detectivevip
· 08-10 11:37
Another roll of DEX, huh?
View OriginalReply0
CrossChainBreathervip
· 08-10 11:37
Efficiency first, monopoly above all!
View OriginalReply0
NeverPresentvip
· 08-10 11:32
It's the homework copying party again..... I'm so sick of V3.
View OriginalReply0
GasFeeThundervip
· 08-10 11:31
Another v3 altcoin? Data shows 90% die in the first month... let's wait and see.
View OriginalReply0
CantAffordPancakevip
· 08-10 11:18
Isn’t it just a copy of V3? What’s all this talk about new innovations?
View OriginalReply0
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