Cetus Review: Uniswap V3 And Trader Joe’s Advanced Matching Protocol

Aptos is a promising and ambitious new layer 1 blockchain, and initiatives that support liquidity will assist speed its development. Cetus, an effective capital management project powered by a centralized liquidity algorithm, is one of the initiatives assisting Aptos in attracting financial flow into this ecosystem. Let’s learn details about this project with Coincu through this Cetus Review article.

What is Cetus?

Cetus Protocol is an AMM Dex that uses a Concentrated Liquidity Market Makers (CLMM) and incorporates elements of Uniswap V3 and Trader Joe. Cetus is written in the Move programming language and works with both the Sui and Aptos ecosystems.

Based on CLMM, Cetus is developing a highly customizable liquidity mechanism. Users may execute practically all types of complicated trading strategies possible on CEX by combining swaps, range orders, and limit orders in a customizable manner. Moreover, liquidity providers may use CLMM to use various different techniques in order to enhance their liquidity efficiency.

In the process of developing a centralized liquidity protocol, it focuses on providing the greatest trading experience and excellent liquidity to DeFi customers and a range of functional modules may connect with the link unit. Other programs may simply integrate or utilize Cetus liquidity thanks to the Cetus SDK toolbox.

Cetus’ centralized liquidity algorithm-based feature benefits both liquidity providers and traders. LPs may earn trading commissions more effectively by concentrating liquidity in the active price range.

During their trading session, traders may trade at low spot prices. Moreover, by combining Cetus’ most powerful source of liquidity with publicly accessible SDKs and smart contracts, developers may simply construct their own products and participate in Cetus’ most powerful source of liquidity.

Cetus, as a DEX, allows the trading of digital assets on Aptos and Sui to be frictionless, safe, and trustless. It also adds liquidity to the market by enabling LPs to bet and receive rewards with their digital assets.

Cetus, as a concentrated liquidity protocol, enables users to trade with leverage, allowing them to receive additional rewards. It also allows LPs to receive greater incentives by increasing their liquidity.

What is concentrated liquidity?

Cetus’ core feature is focused liquidity, which enables consumers to add liquidity within defined pricing ranges. Liquidity is provided equitably over the whole price curve in AMM protocols, which are used by the majority of mainstream decentralized exchanges today. Cetus’ innovative technique, on the other hand, enables customers to define their own pricing ranges, resulting in more efficient price discovery and speedier trading.

Moreover, Cetus enables users to trade directly with one another, eliminating the requirement for a centralized order book. This not only saves trading expenses but also makes trading quicker and simpler.

The issue is that when the price of a trading pair rises or falls, it may be difficult to predict which direction the liquidity provider will react. If you are not cautious, you may find yourself on the wrong side of the deal.

This is why it is critical to monitor the price of a trading pair. If you see that the price is trending in one way, you should keep an eye on the liquidity provider’s stance. If they begin to purchase or sell the other token in the pair, it might be an indication that the price is likely to reverse.

Of course, this is just one tool that may assist you in making better deals. Nonetheless, keep a watch on the liquidity providers since they might offer insight into where the price is heading.

Ultimately, Cetus’ unique approach to liquidity and trading makes it a far more efficient and effective method to trade cryptocurrencies. Cetus is certainly worth a look if you’re seeking a more efficient approach to trade. Now, the Cetus Review article will learn about how the project works.

How does it work?

The Cetus maximizes profits for liquidity suppliers (specifically, the more liquidity is used, the more liquidity providers will benefit from the fees it provides). by centralizing liquidity providers’ money inside a single operational area under a consolidated liquidity protocol on the platform.

From then, the protocol’s operating mechanism may considerably increase the efficiency of liquidity providers’ capital utilization when compared to other standard AMM DEXs (which typically employ the characteristic model x * y = z).

Users may deposit liquidity and choose a pricing zone for effective liquidity, as with other centralized liquidity AMMs. Moreover, Cetus has four modes to accommodate investors with varying risk tolerances:

• Conservative: This setting is appropriate for people who monitor the market on a regular basis. This model provides a somewhat broad and narrow range based on the last 7 days of market data. Conservative mode may be more suited to emerging mainstream tokens (strong but still very volatile) like APT, SOL, SUI, and so on.
• Active: Similar to Conservative, this option is appropriate for people who monitor the market on a frequent basis. This model provides a somewhat broad and narrow range based on the last 7 days of market data. But, significant time-tested currencies like BTC and ETH may be used in Active mode.
• Full Range: If you are a lazy LP who seldom checks your liquidity or doesn’t have time to go into CLMM, you may just add your liquidity to Full Range. In this instance, the CLMM model effectively becomes a generic AMM.
• Custom: If you have the leisure to monitor market developments every few days, you may use Custom options to concentrate your liquidity a little more. You might begin with a sufficiently broad pricing range to establish your viewpoint.

Protocol highlights

Cetus, driven by its centralized liquidity algorithm, may first redefine capital efficiency for this ecosystem. This benefits both liquidity providers and traders. LPs may collect trading fees more effectively by concentrating liquidity within an active price range. During their swap time, traders may enjoy trading with reduced slippage around the current price. Moreover, by connecting with Cetus’ open-access smart contracts and SDKs, developers may quickly design their own products and become Cetus’ most efficient source of liquidity.

The protocol was first established on Aptos, but as the project expands, it will be expanded to other Move-based blockchain networks.

Move is a new open-source programming language based on Rust that allows you to create secure smart contracts. It was created on Facebook to power the Diem blockchain. Move, on the other hand, is intended to be a platform-independent language that enables libraries, tools, and developer communities to be shared across blockchains with vastly diverse data and execution structures.

Move language is developed with security in mind, avoiding numerous typical Web3 security issues such as reuse, harmful permissions, and permission acceptance problems, phony, etc. The Move Prover tool in the language may also offer extra security for programming tools. Aptos and Sui are both built on Move and are part of the expanding MoveVM ecosystem.

Solana was a representation of the high-speed public chain prior to SUI. Yet, one important reason for Solana’s lack of stamina in ecological evolution is that there has long been a paucity of permissionless pool-building Processes in the ecosystem. It is difficult for community native or MEME ventures to get traction, resulting in inadequate attention to the ecosystem, a lack of fresh hot money, and the formation of a “large household chain.”

For the time being, the state of community native initiatives will be crucial in determining if the ecosystem can thrive fast while SUI is active. Users in Cetus may construct liquidity pools without approval, and projects in Cetus can launch new coins without permission. Cetus will be able to recruit more early project participants and swiftly establish pricing power for long-tail assets in this manner.

Features

Active Liquidity

If the price of a trading pair rises or falls in one direction, liquidity providers will earn more than one token in their position since it indicates more demand for another token from swap participants. When the price hits the higher or lower limit of their position, their whole liquidity becomes one asset, and when the price returns to the original price zone, their liquidity becomes two assets and continues. continue to work

Range Order

LPs may create liquidity with a one-sided asset by constructing a liquid position with a price range defined on one side of the spot price. This enables liquidity providers to replicate limit orders, which are prevalent in the order book or CEX markets. A limit order is made with a precise pre-determined buy or sell price and may be executed at any time in the future, while a liquidity position order is one side of the protocol.

Concentrated liquidity has a price tag. When the spot price reaches the position’s predefined range, a continuous token swap is initiated in the position. If the price has totally broken out of the price range of the position, all of the original assets will be swapped for the target assets, which the LP may withdraw to end the position.

Range holders are considered producers since they operate as liquidity providers rather than swappers when a range order is executed. By establishing adequate liquidity positions, LPs may simply purchase when the price falls and sell when the price increases, much like professional traders, while also earning trading fees.

Oracle

Cetus’ centralized liquidity pool may also be utilized as an oracle, granting access to the pool’s historical pricing and liquidity data to developers or other platforms. This is a novel alternative to conventional oracles based on offline data in the DeFi ecosystem. The prices and data offered by the oracle based on Cetus are real market outcomes established by actual buyers and sellers.

Cross-Chain Bridge

Cetus incorporated the Wormhole SDK into its own user interface to provide a cross-chain bridging interface. Wormhole’s service completely powers this capability, enabling customers to shift their assets across blockchain networks at their leisure.

Price Ticks

A couple of ticks separate the price line of intense liquidity. There is a gap between each check mark and the check mark next to it. As we move the Tick up and down, we see a 0.01% gain or reduction (1 basis point) in price at any position in the pricing area.

Tick Spacing

Each pool is separated into many liquidity portions, each with its own set of predetermined bounds known as “Ticks.” A tick distance of 8 implies that each tick equals 0.08%, whereas a tick distance of 128 means that each tick equals 1.28%. To provide a more comprehensive pricing range, the stable team will employ a narrower tick distance.

Only liquidity in positions with an active price range may be utilized by transactions in a centralized liquidity protocol, producing transaction fees. A liquid position’s transaction fee performance shows its efficiency and contribution to the protocol.

Consequently, one of the most distinguishing elements of Cetus liquidity mining is that mining incentives will be distributed to users based on their real fee performance rather than their liquidity. If the liquidity provider wants to earn higher fees and mining incentives, he or she must participate more actively.

Fee

In the protocol, it is possible to set up multiple pools for the same pair of tokens with different fees. Initially, there will be 4 tiers allowed by the protocol: 0.01%, 0.05%, 0.25%, 1%.

CETUS token

It is the native cryptographically-secure fungible protocol token of Cetus. The token is a transferable representation of the protocol’s ascribed governance and utility functions and is intended to be used purely as an interoperable utility token thereupon. Users may earn it by mining liquidity on Cetus.

Key Metrics

• Name: Cetus Token
• Ticker: CETUS
• Chain: Sui
• Total Supply (Max): 1,000,000,000

Allocation

Investors and Partners

Investors

Seed round on May 2, 2023, led by OKX Ventures and Kucoin Ventures with participation from numerous funds including Animoca Brands, NGC Ventures, Jump Crypto, Adaverse, Coin98 Ventures, Comma3 Ventures, IDG Capital, AC Capital, and Leland Ventures for an unknown sum.

Partners

The project cooperates with many partners such as: Hippo Labs, Port3, omniBTC, LayerZero, Tortuga, Port3 Network, x Celer, Fewcha, MoveMarketCap…

Conclusion of Cetus Review

Cetus drew influence from Uniswap and Trader Joe to create a more comprehensive offering since it was born later. The protocol, on the other hand, has a very intelligent development strategy when selecting a destination, Sui and Aptos, in these two new networks the DEX CLMMs have not been developed and utilized strongly, so it is extremely competitive. Hopefully the Cetus Review article has helped you understand more about the project.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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