AMM

Rooster Protocol brings unmatched flexibility, efficiency, and innovation to liquidity provision.

Rooster Protocol uses an advanced Distribution AMM to adapt liquidity for various market conditions, empowering liquidity providers (LPs) to generate fees from traders by maintaining active liquidity near market prices.

The Distribution AMM represents a significant evolution in concentrated DEX liquidity. The default solution for concentrated liquidity is the Range AMM, which allows Liquidity Providers (LPs) to select a price range over which their liquidity is uniformly distributed. This results in flat distributions with the same percentage of token liquidity deposited at each price tick within the range.

With Rooster, LP can customize the shape of their liquidity distribution tick by tick, unlocking the potential for more complex liquidity strategies that are better optimized for each token pair.

Rooster lets LPs customize shapes for their liquidity which aren't possible in standard Range AMMs.

The Rooster UI offers LPs two types of distribution by default:

• Flat - distributes liquidity evenly across a range of bins, centered around the current pool price (similar to other concentrated liquidity AMMs).

• Exponential - starts with a concentration of liquidity around the current pool price and spreads the rest of the liquidity in exponentially decreasing amounts across the bins to the left and right.

The Exponential distribution is offered as an out-of-the-box option based on the findings of this paper fromHarvard, which concludes that this is the most risk-optimized distribution for LPing in Range AMMs. Flat is available for users who want an LPing experience similar to standard Range aMMs. Both of these distributions can also be customized bin by bin after they have been selected.

Rooster's specialized AMM makes it ideal for projects looking to bootstrap liquidity, maintain a stable peg, or incentivize trading activity in the RWA ecosystem.