AMM Pools

DegenHive supports the permissionless creation of 2-token or 3-token AMM pools. It offers three distinct pool types, each designed to cater to different liquidity provision strategies and trading needs of protocols building on-top of Sui network:

1. Passive Concentrated Liquidity (PCL): Allows for efficient, low-slippage swaps between tokens with varying price correlations. DegenHive PCL pools utilize:

   1. Bonding Curve: Adjusted with parameters for fine-tuning liquidity concentration and pricing.

   2. Price Scaling: Dynamically adjusts to provide deep liquidity around the current market price.

   3. Dynamic Fee Mechanism: Fees change based on pool balance, rewarding liquidity providers during periods of imbalance.

   

   Left image: Comparison of AMM invariants: Curve v2 (orange), StableSwap (blue), and two constant product invariants (dashed) Right image: Schematic showing fees as a function of pool balance. As the pool goes from fully balanced (x-axis = 1) to fully imbalanced (x-axis = 0), fees increase from mid fee to out fee.
2. Stableswap: Designed for trading assets with closely correlated prices (such as stablecoins), Stableswap pools minimize slippage and offer greater efficiency for these trades.

3. Weighted: Weighted pools support a wider array of assets and allow for customizable ratios. Prices are determined based on pool balances, weights assigned to individual assets, and the size of the trade.

Note : DegenHive pools come with built-in functionality for flash loans and cumulative price calculations, offering developers the capability to construct TWAP (Time-Weighted Average Price) oracle feeds for tokens traded on the protocol.

Fee tiers:

DegenHive's AMM pools follow the following fee structure by default.

• PCL pools: PCL pools charge fees dynamically based on pool's internal fee config, which incresases during period of low volume and decreases during period of high volume. Out of the total fees charged, 70% is charged as protocol fees and remaining 30% is distributed among LPs

• Stableswap pools: 0.35% fee is charged on every swap, out of which 70% is charged as protocol fees and remaining 30% is distributed among LPs

• Weighted pools: 0.35% fee is charged on every swap, out of which 70% is charged as protocol fees and remaining 30% is distributed among LPs

Note: Fee structure for every pool is updatable by the LPs of that pool by passing a governance proposal.

Protocol fees distribution

As stated above, every 70% of the swap fees collected by every pool is collected as protocol fees. This fees is then distributed as follows -

1. All protocol fees collected by a pool is swapped for SUI.

2. 10% of this SUI is added to protocol treasury and is stored with YieldFlow shared object.

3. Remaining SUI is equally used to buyback HIVE and HONEY tokens.

4. 50% of the bought HIVE and HONEY tokens are then distributed among dragon-bee eggs locked with the AMM pool. (incentivizing dragon-trainers to lock egg with AMM pools which earn more fees)

5. Remaining 50% of HIVE and HONEY are distributed among all dragon-bee eggs based on their vHIVE and locked HONEY values.

AMM trading fees distribution flowchart