Algebra - Integral V4
SwapX's official partner and main engine is Algebra Finance, whose Integral technology, similar to the Uniswap V4 approach, uses a modular structure that allows the use of plugins (also known as hooks), true add-ons that easily allow continuous evolution, seamlessly integrating all future innovations.
Algebra Finance
Algebra is a dedicated team that specializes in research and development within the Automated Market Makers (AMM) space.
At present, Algebra is a technology leader. Before the launch of Integral, the previous iteration, Algebra V3, had already achieved remarkable success and a prominent position on various networks, including Polygon, Arbitrum, Polkadot, BNB, and others.
Automated Market Maker (AMM) DEXs
An automated market-making protocol is typically synonymous with decentralized exchanges.
Instead of traditional match-making services, like CEXs, AMM uses smart contracts as liquidity pools to provide liquidity to others. They collect crypto assets from liquidity providers who offer liquidity-providing services in return for an interest rate.
Algebra has established successful partnerships with more than 60 projects.
Introduction
Existing technology inside DEXs can quickly become outdated, failing to keep pace with DeFi trends, resulting in low liquidity efficiency, ensuring rapid evolution in the DEX space; a solution is essential to expand functionality in line with market trends.
In recent years, new solutions and algorithms have emerged for more efficient liquidity management, dynamic fee adjustments and trading capabilities.
👀 Algebra Integral
Algebra Integral is an advanced solution for decentralized exchanges that introduces a Modular Architecture with custom plugins, reinventing the way that DEXes operate.
Integral divides the previously monolithic infrastructure into two essential components: the Core Codebase and Plugins, which play a crucial role in enhancing the efficiency, security, and adaptability of DEXes, competing with the Uniswap V4 approach.
Algebra Integral represents a modern approach to concentrated liquidity, enabling the seamless integration of plugins on top of liquidity pools.
⚡ Efficiency
The implementation of Algebra Integral technology offers DEXes numerous advantages.
Gas Efficiency: Integral's optimized core saves an average of 7-22% and up to 78% on gas costs compared to Uniswap V3.
Modularity & Customizability: Dex protocols often struggle to update infrastructure due to immutability requirements, hindering innovation. Plugins enable new functions without liquidity migration to adapt to developments in the decentralized financial space.
Secure Codebase: The optimized core minimizes gas waste, increasing efficiency while ensuring users’ fund security.
The final goal of Integral is a significant increase in TVL, trading volume and overall efficiency, which a platform’s revenue growth will follow.
SwapX will be the first DEX to adopt this technology on the X Layer blockchain, where secure and efficient contracts ensure greater efficiency for traders. This will be reflected in improved indexing on major DEX aggregators, including the official OKX wallet platform, offering potential visibility to up to 50 million users.
🕵 Plugins Technical Overview
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, separating the most vulnerable part (liquidity storage) from the peripheral functionality modules (e.g., oracles, fee calculation) became possible.
The critical functionality of liquidity storage and swap calculation is kept in the immutable core, while the peripheral functionality of Plugins can be updated as needed.
This approach allows for faster development of DEXes.
Plugins can be introduced by DEXes themselves or external developers encouraged to create new Plugins and push the technology forward according to DeFi's current trends, possibly creating a competitive market of Plugins covering the most various needs.
Plugins interact with pools via hooks, a function that connects the plugin to the pool and is triggered before or after a specific key event, allowing the plugin and the pool to exchange information.
Integral centralizes liquidity within a secure core code that includes a single pool for each token pair, minimizing fragmentation and making it easier for users to decide where to allocate their liquidity, and enabling routers and aggregators to more efficiently identify optimal swap routes, all while providing customization options.
This core code’s stability ensures the security of users’ funds and eliminates the need to remove or migrate all liquidity when updating or adding/removing plugins on the platform, also preventing unnecessary gas wastage.
In summary, Algebra Integral presents a game-changing approach.
💡 Interaction between Liquidity Pools and Plugins
A Plugin is a smart contract that connects to a Pool’s contract and expands its functionality.
TWAP-oracle: This oracle provides average statistical information about the price of a specific token pair, making it easy to access.
Volatility-oracle: Utilizing data from the TWAP-oracle, the plugin efficiently calculates the daily price volatility in a token pair.
Dynamic fee: Considering the daily price volatility, the plugin automatically adjusts the commission values within the pool to better align with changing market conditions.
On-chain farmings: This plugin enables the effective utilization of farmings for concentrated liquidity purposes.
Limit Orders: The Limit Orders Plugin lets users place limit orders that automatically execute when they reach a specified price (no external calls required).
Potential Plugins development directions currently include:
Every dynamic fees options
Gas discount/compensation system for trades
Impermanent loss reduction
Perpetuals
Liquidity Management
Staking base fee discount
Fees Discount based on NFT holding
Cross-chain implementations
Security emergencies stop
Anti Hack improvements
and many more!
What a Plugin can do: do arbitrary actions on the blockchain (including calling other contracts), change the fee in the pool, do additional checks, etc.
What a Plugin cannot do: take someone’s liquidity or tokens (directly), and change the logic (mathematics) of calculations.
With numerous plugins currently under development, the introduction of Algebra - Integral and Uniswap V4 will position this technology at the forefront of the next narrative in the DeFi space.
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