What is Cetus Protocol? Cetus Protocol is an AMM Dex that uses a centralized liquidity model (CLMM) that combines the essence of Uniswap V3 and Trader Joe. The project recently received investment and interest from leading funds such as Jump Crypto, Animoca Brands, OKX Blockdream Ventures.
So what is Cetus Protocol? What’s special about it? Let’s find out in this article!
To understand more about the project, you can read the following articles:
- Operating mechanism: Uniswap – From challenger to unique position
- Series 3: Real Builder in Winter | Uniswap – The True Unicorn Cryptocurrency Ever Produced
- What is Trader Joe’s (JOE)? Trader Joe’s Cryptocurrency Overview
- Series 4: Real Builder in Winter | Trader Joe – From a Follower to a Leader
- Uniswap & TraderJoe: Centralized Liquidity War. Is Joe the Winner?
What is Cetus Protocol?
Overview of Cetus Protocol
Cetus Protocol is an AMM platform that uses a centralized liquidity model (CLMM) that combines the essence of Uniswap V3 and Trader Joe. Cetus is developed using the Move programming language and supports the Sui ecosystem as well as the Aptos ecosystem.
Cetus is building a highly customizable liquidity protocol based on CLMM. Through the flexible composition of swaps, range orders and limit orders, users can virtually execute all types of complex trading strategies achievable on CEX. Besides, liquidity providers can also implement various Maker strategies using CLMM to maximize their liquidity efficiency.
It focuses on bringing the best trading experience and superior liquidity efficiency to DeFi users through the construction of a centralized liquidity protocol and a series of interoperable functional modules. affiliated unit. Thanks to the Cetus SDK, other projects can easily integrate or use Cetus liquidity.
Mechanism of action
As with other centralized liquidity AMMs, users can deposit liquidity and choose a price range for liquidity to operate effectively. In addition, Cetus also supports 4 modes to suit investors with different risk appetites:
- Conservative: This mode is suitable for those who pay attention to the market on a regular basis. A relatively wide and narrow range is given in this mode respectively according to the last 7 days market history. Conservative mode may be more suitable for new mainstream tokens (strong but still highly volatile) such as APT, SOL, SUI,…
- Active: Like the Conservative regime, it is suitable for those who pay attention to the market on a regular basis. A relatively wide and narrow range is given in this mode respectively according to the last 7 days market history. But Active mode can be applied to major coins that have been proven over time such as BTC, ETH.
- Full Range: This mode is suitable LPs are lazy, rarely check their liquidity or you don’t even have time to learn CLMM thoroughly, then you can simply choose to add your liquidity Full Range. In this case, the CLMM model essentially downgrades to a generic AMM.
- Custom:
If you have time to monitor ongoing market changes every few days, you can choose Custom settings to centralize your liquidity a bit. You can start with a wide enough price range to create your position. For example, if the current ETH price is 1400USDC, you can manually set your price range as [200, 4800]. Those were the lowest and highest ETH prices since February 2020.
Active Liquidity
If the price of a trading pair increases or decreases in one direction, liquidity providers gain more than one token in their position because it indicates more demand for the other token from Swappers. When the price reaches the upper or lower limit of their position, their entire liquidity turns into one asset and if the price goes back to the original price range then your liquidity turns into 2 assets and then continue to operate
Fee
In the Cetus centralized liquidity protocol, it is possible to set up multiple pools for the same token pair with different fees. Initially, there will be 4 tiers allowed by the protocol: 0.01%, 0.05%, 0.25%, 1%.
Range Order
By creating a liquidity position with a price range set on one side of the spot price, LPs can provide their liquidity with one-sided assets. This allows liquidity providers to simulate limit orders that are very popular in those order book markets or CEX. The difference is that a limit order is created with a specific predetermined buy or sell price and the order can be executed at some point in the future, while a one-sided liquid position order within the protocol Centralized liquidity comes with a price range. When the spot price enters the preset range of the position, a continuous token swap will be triggered in the position. If the price has completely surpassed the position’s price range, all of the initial assets will be exchanged for the target asset, which the LP can withdraw to close the position.
Range order takers act as liquidity providers instead of swappers, so they are considered makers who will earn fees when the range order is filled. By creating reasonable liquidity positions, LPs can easily buy when prices fall and sell when prices rise just like professional traders and earn trading fees at the same time.
Oracle
Cetus’ centralized liquidity pool can also be used as an oracle to provide external developers or platforms access to the pool’s historical price and liquidity data. This is a new option for the DeFi ecosystem besides traditional oracles based on offline data. The prices and data provided by the Cetus-based oracle are the results naturally determined by actual buyers and sellers in the market.
Cross-Chain Bridge
Cetus has integrated the Wormhole SDK to establish a cross-chain bridging interface in its own user interface. This functionality is fully provided by Wormhole’s service, allowing users to move their assets across different blockchain networks at their convenience.
Price Ticks
The price line of centralized liquidity is divided by a number of ticks. A space can be found between each check mark and the check mark next to it. When we move up and down with a Tick, it displays a 0.01% (1 basis point) increase or decrease in price at any point in the price space.
Tick Spacing
Each pool is divided equally into multiple liquid shares with predefined boundaries called “Ticks”. A tick spacing of 8 means each Tick equals 0.08% and 128 means each Tick equals 1.28%. The stable group will use smaller tick spacing to allow for more granular price ranges.
In a centralized liquidity protocol, only liquidity in positions with an active price range can be consumed by transactions, which in turn can generate transaction fees. The transaction fee performance of a liquidity position reflects its efficiency and contribution to the protocol. Therefore, one of the most distinctive features of Cetus liquidity mining is that it will distribute mining rewards to users according to their actual fee performance, rather than based on their liquidity amount. This requires more active participation if the liquidity provider wants to earn more fees and mining rewards.
Users will receive a smart contract-generated NFT as proof of position ownership when added within a custom price range that can be referred to as a position or liquidity position. NFT will record the following information of a position:
- Unique id
- Pool address
- Position index in Pool
- Location name
- Describe
- NFT Url
- The index marks the bottom of the position
- The index marks the top of the position
- Liquidity
Development Roadmap
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Core Team
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Investors
- May 2, 2023: Seed round raised with an undisclosed amount led by OKX Ventures, Kucoin Ventures and with participation from a number of funds such as Animoca Brands, NGC Ventures, Jump Crypto, Adaverse, Coin98 Ventures, Comma3 Ventures, IDG Capital, AC Capital, Leland Ventures.
Tokenomics
Overview information about Cetus Protocol Token
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Token Allocation and Token Release
- Investors: 15% dedicated to private fundraising and strategic fundraisingUp to 15% dedicated to private fundraising and strategic fundraising. There will be 6 months of lock and 12 months of vesting.
- Team & Advisors: 20% owned by founding team contributors and key advisors. There will be 12 months of lock and 24 months of lock vesting.
- Eco Treasury: 15% reserved for initial liquidity, long-term community campaigns, and insurance fund.
- Community & LP: 50% distributed through yield farming and other liquidity incentive programs.
Token Use Case
The CETUS token is used to govern the protocol and is used for utilities on the Cetus Protocol.
Exchanges
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Cetus Protocol Information Channel
- Website: https://www.cetus.zone/
- Twitter: https://twitter.com/CetusProtocol
- Discord: https://discord.gg/cetusprotocol
- Medium:
Summary
Cetus Protocol is an AMM Dex protocol that uses a centralized liquidity model (CLMM) on Aptos and Sui. Because it was born later, Cetus took inspiration from Uniswap and Trader Joe to bring a more complete product. On the other hand, Cetus has a very wise development strategy when choosing destinations such as Sui and Aptos. In these two new networks, Dex CLMM has not been developed or used strongly, so it has a very competitive advantage.
So I have clarified what Cetus Protocol is? Overview of Cetus Protocol cryptocurrency. Hope this article brings you a lot of useful knowledge!