What is Invariant?
Invariant is the first significant Automated Market Maker (AMM) DEX providing concentrated liquidity on Solana.
The Invariant protocol is a peer-to-peer system for exchanging assets on the Solana blockchain. The protocol is implemented as a set of smart contracts that prioritize censorship resistance, security, self-custody, and an ability to operate without using trusted intermediaries who can selectively restrict access.
The birth of the idea
While Solana has multiple exchange protocols, the most advanced ones appear to focus on other blockchains. That is something we want Invariant to change. We decided to bring Uniswap v3 to Solana, because its concept of providing liquidity only within a certain range seemed the most promising.
At first glance, Invariant may appear to be another exchange with liquidity providers, swaps, and trade fees. What distinguishes it from the rest is the functionality of providing liquidity only within certain price ranges. This has the effect of keeping the liquidity where the price currently is and thus where it is most needed. As liquidity is more efficient on Invariant, it stands to reason that trades will benefit from it.
It results in lower fees on trades by an order of magnitude. By default, 0.04% will be set as the default value.
Furthermore, users benefit from increased virtual liquidity, which translates into smaller slippage on trades.
Liquidity concentration enables much higher efficiency than traditional AMMs. In other words, producing the same amount of liquidity requires fewer tokens. Keeping liquidity close to the price can boost this effect even more.
Comparing Invariant to common exchanges
Invariant is an auto market maker decentralized exchange, based on liquidity pools instead of an order book.
Order book vs AMM
Order book is a mechanism that you can find on most exchanges, starting with NASDAQ and ending with FTX.
In short, the centralized order book is the middleman between Trader A and Trader B.
We have got rid of this middleman — Invariant is based on liquidity pools.
This system excludes counterparties in the traditional sense, as trades happen between a user and a program (smart contract).
The liquidity is provided by liquidity providers who earn passive income on their deposit due to trading fees, based on the share of the liquidity pool that they provide.
Concentrated liquidity
The main feature of Invariant. It enables maximum capital efficiency. In common liquidity pools, liquidity is distributed along the whole price curve.
Here, in Invariant, you can choose an exact price range. As a result, the whole amount invested will earn for you
As a result, your capital can be even 4000x more efficient.
Sounds great, right?
Price of the tokens
The price of the tokens in Invariant is determined by the ratio of both tokens in the liquidity pool.
This ratio is given by the following formula, where:
- L is liquidity,
- y is the unit quantity of the Y token
- x is the unit quantity of the X token
Single token LP
Concentrated liquidity allows one more, interesting feature — liquidity position with only one token.
As a result, you can deposit a single token if the chosen range price is above or below the current price.
The single token liquidity position
What’s the benefit?
When price will enter your chosen range, you will start earning, even though you only provide one token
Ticks
Without ticks, there is no possible way to make concentrated liquidity work.
Tick is the boundaries between discrete areas in price space. It represents a 0.01% difference in the price.
To better illustrate what a tick is, we will show it with an example.
Imagine, that you are creating a liquidity position, and you have to choose a price range.
By clicking the plus or minus to change the price, you move (in most cases) by one tick.
Revenue sharing
Our goal is not only to make Invariant the biggest DEX on Solana, but to create an ecosystem with many projects, which will use our platform.
We prepare a special system, encouraging devs to build their dApps on Invariant.
Revenue sharing allows the fee to be passed to a source other than the Invariant protocol.
What can you do with Invariant?
Our platform is not only a place to swap Solana tokens but also for:
- Pool creation: Users can create Liquidity Pools.
- Adding liquidity: Users can become liquidity providers to earn trading fees.
- Arbitrage: Immediate and cheap transition is perfect for arbitrage.
- Launching your own token: You will be able to add your own token and create a liquidity pool for it. You don’t need any launchpad now, you have Invariant
- Adding tokens: Invariant will allow you to add even your personal token
- Creating Liquidity Pool: Token need pools, so also, we will give you the ability to create a pools
How can you cooperate with Invariant?
- Program integration: We have talked to many projects that want to integrate with Invariant, like arbitrages, yield aggregators, liquidity aggregators, position managements, perpetuals
- Listing your token: Create liquidity pools. Naturally, creating a pool is fully permissionless and requires less liquidity on Invariant due to concentrated liquidity. It’s also possible to create custom incentives and revenue sharing.
- Program as a service: We are only working on the bonds mechanism, however, in the future we’ll probably introduce more.
Plan for the future
- Security audit
- New tokens (we plan to add a mechanism that implements all tokens from the Solana ecosystem and will allow users to add new ones)
- Invariant token (we plan to create IDO)
- Bonds
- Staker
- Governance (DAO)
