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 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 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.