Cyclos: the first-ever concentrated liquidity AMM on Solana

Winners of the Kin Foundation prize pool in the just concluded Solana Season Hackathon, Cyclos, is the first-ever concentrated liquidity automated market maker on Solana - the world’s most efficient public blockchain to date. Cyclos aims to build the most efficient and competitive market maker platform on Solana, with a highly sustainable community of liquidity pool providers, traders, and an ecosystem of partners to push for the adoption of the most efficient automated market maker platform.

Computers have disrupted nearly every industry since their inception and every new tech-driven and/or computer-based innovation builds on the previous one, producing sophisticated digital products and services. The blockchain and cryptocurrency industry aims to disrupt the traditional system, changing archaic methods and systems to trustless, technology-driven, smart systems. Many industries are currently being disrupted by the advancement of blockchain technology; from the finance industry to gaming, infrastructure, prediction markets, voting, insurance, oracles, analytics, development, marketplace, and most recently art. The finance industry is the most recent industry to face massive disruption with the advent of DeFi (Decentralized Finance). DeFi since its introduction in 2017, has not just gained global traction but has also arguably disrupted the financial industry with its unique features of programmability, immutability, interoperability, , scalability, and transparency.

The defi industry has grown in value from about $2.627 Million on October 1st, 2017 to a peak of about $88.774 Billion on May 12th, 2021. The massive growth of over 10,000%. The creation of Uniswap by Hayden Adams in November 2018 transformed the entire defi industry, with exponential growth and adoption. The launch of Uniswap v3 in May 2021 with its game-changing ‘Concentrated liquidity’, cemented its position as the undisputable automated market maker on the Ethereum network but, what about scalability, efficiency, and stable asset users? Here comes Cyclos.

Cyclos is improving Uniswap’ss v3 innovation ‘Concentrated liquidity’ to build the most efficient market maker platform for the defi industry. What is concentrated liquidity?

Concentrated liquidity is a feature that makes a basic AMM more efficient for its users. A basic AMM would allow liquidity pool providers to deposit two separate tokens into a liquidity pool at a price determined by the ratio of the tokens deposited. Liquidity pool providers are given rewards from fees paid by traders who buy or sell tokens from that liquidity pool. Concentrated liquidity allows liquidity providers to select a price range within which their deposited liquidity will be active and receive rewards. In a Pool with 100 USDT and 100 BUSD, then 1 USDT is worth 1 BUSD and vice versa. With a caveat, liquidity pool providers can choose to activate their deposited liquidity within the range of $0.9 — $1.01 for both BUSD and USDT.

Why is Cyclos better?

Cyclos is integrating Uniswap’s v3 concentrated liquidity to build its highly scalable decentralized order book. Cyclos is the first-ever market maker on Solana using Serum’s order book to execute concentrated liquidity as well as stable assets market making with low slippage. Solana network is highly efficient and scalable. With Serum dex on Solana, Cyclos will integrate its order books to execute both retail trading and high-frequency trading for big institutional players. As mentioned in the beginning, institutions are adopting defi and need a highly scalable, robust, and efficient platform for high-frequency/ algorithmic trading which is absent in the current set of traditional defi AMM. Cyclos is leading the charge in the next wave of defi adoption with its unique features:

  1. Cost-efficiency in bootstrapping new pools. Cyclos is reducing the capital required to start a pool, more native-SPL tokens grow and gain acceptance.
  2. Improved returns of 10–100x for liquidity pool providers than the average 0.4% — 3%, to attract more userbase and increase liquidity for more market depth and high-frequency trading. Cyclos would also provide automatic compounding of liquidity pool profits into the same pools.
  3. Stable assets market making on order books using Serum dex to increase stable assets liquidity deposits during bullish and bearish market conditions. These features would provide both retail and institutional/ high-frequency trading with good volume on a secure, efficient, and highly scalable Solana chain.
  4. The adoption of Serum’s order book would also protect Cyclos against Whale/ Bot activities and direct flash loan attacks.

These features of Cyclos would not just aid its adoption but also make it the most utilized automated market maker in the defi industry. Cyclos is on course to transform the defi industry with its unique protocol on Solana — the most efficient blockchain to date. With a vision to build a highly competitive, user-friendly AMM that lowers the barrier to entry for everyday DeFi users, Cyclos is leading the charge in defi adoption.

To learn more about Cyclos, visit the website and join the community Telegram Twitter Discord

With over four years of researching and writing, Ini Abasi’s unique writing speaks loudly. Ini Abasi writes articles that you won’t be able to put down.