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Key points
Cetus is a decentralized exchange and liquidity system protocol. The protocol is built on the Sui and Aptos blockchains.
Cetus's mission is to build a flexible and reliable liquidity network that helps DeFi users trade more easily and efficiently.
Cetus Protocol uses a centralized liquidity market maker (CLMM) model that can enhance capital efficiency by allowing liquidity providers to choose narrower price ranges for their positions.
What is Cetus?
Cetus is a decentralized exchange (DEX) and centralized liquidity protocol built on the Sui and Aptos blockchains. The main goal of the protocol is to make it easier and more convenient for people to trade by creating a flexible and robust network for market liquidity.
Cetus also aims to provide DeFi users with a top-notch trading experience and improve the use of liquidity in the Web3 space.
Key features of Cetus
No permissions needed
Cetus allows anyone or any application to freely use the core tools and functions of the protocol. For example, users can use Cetus to create new trading pools or set up custom services related to liquidity. Users do not need any special permissions to get started.
Programmable
Cetus is a flexible liquidity protocol based on a liquidity model called Centralized Liquidity Market Maker (CLMM). Users can set up various types of trading strategies, including complex strategies often found on centralized exchanges. The CLMM model also allows liquidity providers to maximize capital efficiency.
Interoperability
Cetus is built with integration in mind, providing 'Liquidity as a Service'. This means developers can easily leverage Cetus liquidity for their own services such as creating vaults, derivative products, or leveraged mining products. Cetus's software tools also allow new projects to quickly set up trading or swapping interfaces on their own pages.
Sustainability
The Cetus ecosystem uses a dual-token model to ensure the long-term sustainability of the protocol. This model is designed to provide long-term rewards for contributors and active participants in the network's activities.
CETUS is the main native token while xCETUS is the liquidity staking token (LST) representing staked CETUS.
Centralized Liquidity Market Maker (CLMM)
In the standard automated market maker (AMM) model, liquidity is spread evenly across the entire price range. However, this often results in a significant portion of liquidity being unused, especially in stablecoin pools where prices remain relatively stable.
In the centralized liquidity market maker (CLMM) model, liquidity providers (LP) can choose a narrower price range when trading at high levels to earn more fees by using liquidity more effectively.
In the CLMM system, each price range that an LP chooses is called a position, and the provider can establish multiple positions in a liquidity pool to align with their trading strategy.
When the market price moves out of the price range of a position, that liquidity becomes inactive, meaning the position will stop earning fees until the price moves back within the price range. This mechanism allows LPs to flexibly adjust their strategy based on market trends and has the potential to maximize LP profits by targeting active price ranges.
Why did Cetus choose Sui and Aptos?
Cetus operates on the Sui and Aptos blockchain networks.
Sui is designed to support fast transactions and instant payments, making it suitable for applications that require quick responses. The unique architecture of the network also supports advanced new features in the field of Web3.
Aptos is a new blockchain with ambitions to achieve speed, scalability, and resilience. During its development, Cetus plans to become an important part of the Aptos ecosystem, helping to build a more efficient network.
What can liquidity providers earn on Cetus?
Liquidity providers on Cetus can earn money in various ways:
Transaction fees: Providers can earn fees based on the active price range when their liquidity is used in transactions. This is often the primary method of earning for LPs.
Liquidity mining: LPs can earn additional rewards based on their position while earning transaction fees in specific pools and price ranges. Liquidity mining will generate specific NFTs representing the liquidity provider's position.
Loyalty program: Active participants can receive additional rewards through loyalty programs such as liquidity locking and leaderboard events.
Cetus tokens
Cetus has 2 tokens: CETUS and xCETUS.
CETUS is the main token of the Cetus Protocol, designed as an interactive token to be used as a medium of exchange in the network. Users can earn CETUS through liquidity mining.
xCETUS is a non-transferable staking token, representing staked CETUS. Users can participate in the governance system of the Cetus network according to their voting rights (determined by the amount of xCETUS held).
Summary
Cetus is an advanced DEX on Sui and Aptos using the CLMM model. Cetus's goal is to simplify trading operations by building a flexible and robust liquidity network with tools that can help DeFi users trade smoothly and use liquidity efficiently.
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