Website | Integral | Telegram | Twitter
Introduction:
We present a proposal for the integration of Algebra Protocol, a prominent player in concentrated liquidity, with Hercules DEX on the Metis blockchain. Algebra’s expertise and innovative technology will enrich the upcoming Hercules DEX ecosystem. With a track record of over 2 years in providing concentrated liquidity solutions and partnerships with DEXes (20 in total) like Quickswap, THENA, and Camelot, Algebra brings a wealth of experience to this collaboration.
Rationale for Collaboration:
The partnership between Algebra and Hercules DEX is a strategic move. Leveraging Algebra’s experience in integrating with Camelot—a foundational component of Hercules DEX—and its adeptness in concentrated liquidity, this collaboration is poised to enhance Hercules DEX’s functionality. Algebra’s unique implementation of redirectional fees will be integral to Hercules DEX’s architecture, elevating user experience and liquidity provision.
Algebra’s Unique Features:
Algebra Protocol has innovatively evolved the concept of concentrated liquidity initially introduced by Uniswap. The Algebra V1 version offers the following distinct features:
- Dynamic Fees: Tackling the challenge of liquidity concentration, Algebra’s dynamic fee structure simplifies investment choices for liquidity providers. A single pool based on volatility and pool volume streamlines earnings, particularly during volatile market periods, mitigating impermanent loss concerns.
- Built-in Farming: Algebra introduces built-in farming, allowing liquidity providers to not only earn rewards from farming but also gain fees from their liquidity positions, creating a dual revenue stream.
In addition, Algebra will bring an active liquidity manager like Gamma or an equivalent solution. This innovation ensures that positions in pools are actively managed, eliminating the need for users to manually adjust and replace liquidity. Alongside adaptive fees, which generate higher fees, this added feature enhances the overall efficiency of liquidity provision.
Transitioning to Algebra Integral:
While the initial phase involves powering Hercules DEX with Algebra V1, the collaboration is poised for evolution. Algebra’s next iteration, Algebra ‘Integral,’ aims to provide increased partner & user flexibility. This version functions as an engine for DEXes, striking the optimal balance between gas efficiency & functionality. Its modular architecture allows seamless integration & removal of specific modules, reducing the need for liquidity migration and decreasing the gas costs.
Introducing Plugins:
A pivotal feature of Algebra ‘Integral’ is its introduction of a customizable architecture via plugins. These plugins enable the alignment of protocol pools and individual pools with specific smart contracts. Utilizing hooks, plugins influence pool behavior before or after specific actions, enabling extension, enhancement, or modification of standard functionality.
Audits and Security:
Algebra Protocol’s robustness is further fortified by comprehensive audits and real-market testing facilitated by its numerous DEX partnerships. The protocol’s security is validated by audits from reputable firms including ABDK, Hexens and MixBytes: