Dexterity Docs
  • Dexterity
    • Summary
    • Introduction
    • Trading Pairs and Liquidity
    • Technical architecture
    • Token Economics
      • Revenue Model
      • Liquidity Provision
      • Platform Sustainability
      • Governance and Future Token Considerations
      • User Benefits
    • Governance
      • Initial Governance Structure
      • Transition to Decentralized Governance
      • Community Role in Governance
      • Governance Principles
    • Security Measures
    • Frequently Asked Questions (FAQ)
  • POLARITY NETWORK
    • Introduction
    • Polarity Network & Developer Kit
    • Architecture Overview
    • Technical Specification
    • Transaction Flow
    • Security
    • Scalability & Performance
    • Monitoring & Maintenance
    • Governance
    • PLR Token (Polarity)
    • Economic Model
    • Frequently Asked Questions (FAQ)
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  • AMM Protocol
  • Cross-Chain Functionality
  1. Dexterity

Technical architecture

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Last updated 2 months ago

AMM Protocol

Our Automated Market Maker (AMM) protocol is inspired by the successful model of Uniswap V3, leveraging its proven efficiency and liquidity provision mechanisms. Key features include:

  1. Concentrated Liquidity: Liquidity providers can focus their capital within specific price ranges, increasing capital efficiency and reducing slippage for traders.

  2. Price Calculation: We utilize the constant product formula k = x * y, where x and y represent the quantities of two assets in a liquidity pool. This ensures a smooth and predictable price curve.

  3. Liquidity Pools: Users can create and participate in liquidity pools for any supported trading pair, earning fees proportional to their share of the pool.

  4. LP Tokens: Upon providing liquidity, users receive LP (Liquidity Provider) tokens representing their share in the pool. These tokens can be used for governance, yield farming, or redeemed for the underlying assets.

Cross-Chain Functionality

Our platform achieves cross-chain compatibility through a sophisticated bridging mechanism:

  1. Multi-Chain Wallets: The platform maintains wallets across various supported blockchain networks.

  2. Deposit Process:

    1. Users send tokens to the platform's wallet on the respective native blockchain.

    2. The L3 blockchain mints synthetic representations of these tokens.

    3. These synthetic tokens are credited to the user's account on the L3 network.

  3. Trading:

    1. All trading activities occur on the L3 network using the synthetic tokens.

    2. This allows for high-speed transactions regardless of the original blockchain's speed.

  4. Withdrawal Process:

    1. Users initiate a withdrawal request on the L3 network.

    2. The platform burns the synthetic tokens.

    3. Equivalent native tokens are sent from the platform's wallet to the user's wallet on the original blockchain.

  5. Transaction Speed:

    1. Deposit and withdrawal transactions are subject to the speed of the original blockchain.

    2. All trading activities on the L3 network benefit from near-instantaneous transaction speeds.

  6. Liquidity Management:

    1. Liquidity pools on the L3 network use synthetic tokens, allowing for seamless trading between assets from different blockchains.

    2. The platform manages the underlying assets across various blockchain wallets to ensure proper backing of all synthetic tokens.

This architecture allows our platform to combine the security and interoperability of native blockchains with the high-speed trading environment of our L3 solution. Users can enjoy fast, efficient trading while maintaining the ability to easily move assets between different blockchain ecosystems.

How L3 blockchain works

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