Introduction
How Alcor Swap's concentrated liquidity, fee tiers and positions work.
Alcor Swap is a concentrated-liquidity AMM, modelled on Uniswap v3. It is deployed as the swap.alcor contract on WAX, XPR Network, EOS and Telos.
Concentrated liquidity
In a classic constant-product AMM, liquidity is spread over every price from zero to infinity. In Alcor Swap, a liquidity provider (LP) chooses a price range, and their liquidity is used only while the pool price is inside it:
- Inside the range, the position holds both tokens and earns a share of the swap fees in proportion to its liquidity.
- Below or above the range, the position holds only one of the two tokens and earns no fees until the price returns to the range.
A narrower range puts the same capital to work more intensively, so it earns more fees per dollar while the price stays inside it. It also leaves the range sooner and sits fully in one token when it does. A full-range position (Infinity in the app) behaves like a classic AMM position.
Because a position converts from one token to the other as the price crosses its range, a narrow range also works as a limit-style order. See Ranges.
Fee tiers
Each pool is a pair of tokens plus a fee tier, so the same pair can have several pools. The fee is charged on every swap through the pool.
| Fee tier | Suggested for |
|---|---|
| 0.01% | Stable pairs |
| 0.05% | High-volume pairs |
| 0.3% | Most pairs |
| 1% | Exotic pairs |
By default the whole swap fee goes to the pool's liquidity providers. The contract can direct a share of a pool's fee (1/3, 1/4 or 1/10) to the protocol.
Positions
Every liquidity position belongs to one pool and has its own price range. Fees build up in the position until you collect them. You can add liquidity or remove it (unless the position is locked) at any time, but you cannot change a position's range: to move it, close the position and open a new one.
Positions can also be:
Who can create pools
Anyone can create a pool for any two tokens at any fee tier, as long as a pool for that pair and fee tier does not exist yet. The creator sets the starting price. Anyone can also create tokens, so check a token before you trade it or provide liquidity for it.