Sliding Fee

Overview

This Plugin, dividing the casual users from arbitrageurs via monitoring market movements and implementing assymetric fee calculation, allows to increase profits for up to 15% for liquidity providers with minimal impact on regular users.

Key Features

Differentiation of User Types: Identifies and categorizes AMM users into arbitrageurs and casual users based on trading behavior.
Conditional Fee Adjustment: Utilizes a sliding fee mechanism to adjust fees based on consecutive sales or purchases, optimizing swap efficiency.
Spread Boundary Shifting: Adjusts fee spread boundaries according to external market movements, ensuring fee adjustments align with price trends: the swap becomes more expensive in the direction of the price movement and cheaper in the opposite direction.

Benefits

Enhanced Market Differentiation: Distinguishes between user categories, enabling DEXes to tailor fee structures accordingly and attract a broader user base.
Enhanced Profitability for LP's: The sliding window algorithm demonstrated a significant increase in profitability compared to the classic pool, ranging from 2–10% per unit of invested liquidity.
Increased Revenue Potential: Allows DEXes to capture more revenue from arbitrageurs while maintaining competitive fees for casual users, thereby maximizing revenue potential.

Implementation

Integration with Liquidity Pools: The Sliding Fee Plugin is designed to seamlessly integrate with liquidity pools within decentralized exchanges (DEXes), powered by Algebra Integral.

Use Cases

Decentralized Exchanges: The Sliding Fee Plugin is designed to empower decentralized exchanges.

Conclusion

The Sliding Fee Plugin offers a tailored solution for optimizing fee structures in AMMs, catering to the distinct trading behaviors of arbitrageurs and casual users. By dynamically adjusting fees based on market movements and trading patterns, the plugin enhances swap efficiency, revenue potential for DEXes, and profitability for liquidity providers.

About Algebra Integral

Until now, each DEX had its source code in the form of a single immutable monolith, and updating such architecture required liquidity migration and associated additional expenses.

With the advent of Integral, it became possible to separate the most vulnerable part (liquidity storage) and peripheral functionality modules (e.g. oracles, fee calculation) from each other. Critical functionality of liquidity storage and swap calculations is kept at the unchangeable Core, while peripheral functionality performs as Plugins and can be updated when needed without liquidity migration. This approach allows DEXes to develop faster.

Plugins can be introduced by DEXes themselves or external developers encouraged by the fees to create new Plugins and push the technology forward according to DeFi current trends.