Liquidity Pools

Crust Finance features concentrated liquidity pools DEX-wide for maximum capital efficiency.

Crust Finance utilizes a fork of UniSwap V3 concentrated liquidity pools, with a suite of automated liquidity managers (ALMs) as partners to streamline the management of liquidity for users.

What is CL?

Concentrated liquidity plays a crucial role in enhancing the efficiency of swaps in several key ways.

By pooling together a significant amount of liquidity in a concentrated manner, swaps benefit from increased market depth and tighter spreads. This enables participants to execute their trades at more favorable prices and reduces the potential slippage costs.

Concentrated liquidity fosters a higher level of price stability and minimizes the impact of market fluctuations. With a robust pool of liquidity, it becomes easier to absorb large orders without causing substantial price movements. This stability provides traders with greater confidence in executing swaps, as they can anticipate more predictable outcomes. CL also improves the chances of aggregators routing through Crust, increasing trade volume.

Ultimately, the efficiency derived from concentrated liquidity not only benefits individual traders but also contributes to a healthier and more vibrant swaps market overall, generating more organic fees for veCRST voters.

What are ALMs?

Active liquidity managers such as Steer and Ichi play a role in simplifying and maximizing the process of providing liquidity on concentrated liquidity decentralized exchanges (DEXs). These ALMs offer strategies that automate and optimize liquidity provision, making it more accessible and efficient for users. These liquidity managers help liquidity providers maximize their returns while minimizing their exposure to IL risks.

They actively monitor and adjust liquidity positions, and rebalance portfolios to ensure funds allocated are in range and earning emissions. With active liquidity managers Ichi, participants can benefit from streamlined and user-friendly interfaces, simplified liquidity management, and improved profitability, ultimately making the process of providing liquidity on concentrated liquidity DEXs much easier and more rewarding.

NOTE: While ALMs massively streamline the process of providing liquidity to CL positions, it is possible to manually manage your own position on Crust. If you choose to do so (or the gauge has no active liquidity management), you are entitled to $oCRST emissions. Keep in mind that $oCRST emissions are distributed based on trading fees earned. The more fees generated, the more emissions received.

ALM Marketplace

Crust Finance stands out from other CL DEXs by incorporating the use of multiple active liquidity managers instead of relying on a single provider. This unique approach offers several notable advantages.

By utilizing multiple liquidity managers, Crust distributes the responsibility of liquidity provision across various platforms, reducing reliance on a single entity and enhancing the overall resilience and security of the exchange. Decentralization of ALMs also mitigates the risk of a single point of failure and safeguards against potential manipulation or market distortions. Furthermore, using multiple liquidity managers allows Crust Finance to tap into a diverse range of strategies, expertise, and market insights.

Each liquidity manager brings its own unique algorithms and risk management techniques, providing a wider array of options and potential optimizations for liquidity providers.This multi-manager approach promotes healthy competition, fosters innovation, and ensures a dynamic and evolving ecosystem for liquidity provision.

Ultimately, Crust Finance utilization of multiple active liquidity managers not only enhances decentralization but also contributes to increased efficiency, robustness, and resilience in the decentralized exchange landscape.

Merkl

Crust Finance leverages Merkl as a means to distribute emissions in a flexible and efficient manner, providing a tailored approach to incentivize liquidity provision on concentrated liquidity pools.

Developed and maintained by Angle Labs, Merkl operates independently from the Angle Protocol. It serves as a platform where Liquidity Providers (LPs) on concentrated liquidity pools can receive token rewards from incentivizers in a customized manner. The integration of Merkl offers great flexibility to incentivizers, allowing them to choose how they distribute their incentives. They can prioritize LPs based on factors such as liquidity volume, tighter price ranges, incentivizing out-of-range liquidity, or boosting rewards for specific token holders. The Merkl integration supports incentives in any ERC-20 token on various supported Automated Market Makers (AMMs), ensuring compatibility with multiple chains and liquidity management platforms.

LPs using Merkl can earn rewards without incurring any risk or requiring additional smart contract interactions, as they retain custody of their liquidity while receiving incentives. The integration with liquidity position managers like Gamma or Arrakis further enhances the flexibility and convenience of using Merkl, as LPs can be rewarded for their participation without the need to stake specific tokens. Moreover, Merkl imposes a low maintenance fee on distributed incentives, making it cost-effective for Liquidity Providers to utilize the platform.

Overall, the integration of Merkl within Crust's ecosystem enables the efficient and customizable distribution of emissions, empowering liquidity providers with a seamless and rewarding experience.