Introducing Whirlpools: OurNext Generation AMM!
Leveraging the power of centralized liquidity, Whirlpools provides smart and sophisticated LPs (or as we like to call them - sharks 🦈) higher mining yields and better transaction ratios for everyone. On March 23rd, Whirlpools will pave the way for Orca to become AMM's top predator!
What is concentrated liquidity?
In Orca’s current pool—like in all constant pool AMMs, which are a major part of DeFi—liquidity in any given pool is backed by transactions at any price in the universe. While this model is simple, it is not very capital efficient. Trades are subject to high slippage, while unused funds limit liquidity provider yields.
Whirlpools solve this problem by allowing liquidity providers to pool their liquidity in specific price ranges. LPs that provide deeper liquidity to the extent that transactions actually occur will receive a higher share of fees and rewards, thereby encouraging more efficient capital allocation. What's more, deeper liquidity around the actual price of the pair also means less slippage on the trade.
Although LPs will become more competitive, Orca’s swap UX will remain the same, but the transaction price will be more favorable! 💸
When will Whirlpools go live?
On March 23rd, we will go liveOrcanauts Beta!During this time, we will be launching our first three Whirlpools: SOL/USDC, ORCA/USDC, and mSOL/USDC. (The rewards for these pools will start 24 hours later, at the same time as the regular rotation of the aqua farm on March 24).
For the first two weeks, the liquidity supply (and associated incentives) will be limited toOrcanauts NTFsthe holder. So, if you want to be among the first to try Whirlpools, make sure you'veGrab a 'naut (available on NFT Marketplace), and get access to the #orcanautical Discord channel! 🐳
Additionally, Orca Vaults will not charge any fees for Whirlpools once they are launched. This will improve yields for liquidity providers and reduce transaction costs for traders, which in turn will support the long-term growth of the protocol. However, this may change in the future as a function of governance.
Who should provide liquidity to Whirlpools?
In short: Anyone with a good understanding of the crypto market, a high tolerance for risk, and a desire to compete for high returns.
Suppose you expect the price of SOL to fluctuate between $91 - $120 in the next month and provide liquidity within that range on SOL/USDC Whirlpool. If you are correct, you will earn 14.97 times more fee income and rewards than before - at the risk of increasing deviation losses. As you probably understand by now, providing focused mobility is a skill-based exercise. However, we are excited about the potential of Whirlpools to democratize this operation. Unlike other chains, Solana's extremely low transaction fees allow anyone with market knowledge to try and become a shark. In fact, we encourage any first-timer to start with a small deposit, so any potential shipwrecks will only happen on a small scale. 😉
Are smart contracts custom? Can I build on top of it?
Yes, yes! Whirlpools' smart contracts are written entirely from scratch by Orca's industry-trained engineering team. We designed contracts specifically for the Solana virtual machine, with special emphasis on security and efficiency. We also introduced some new ideas, including an optimized implementation for 256-bit numbers.
Centralized liquidity AMMs are conceptually one of the most complex concepts in cryptocurrency, and we believe the quality of our smart contracts will prove themselves.
Kudelski and Neodyme are conducting a double audit of the smart contract. Kudelski's audit has been completed and the report is available upon request. It will also be available upon request once the Neodyme audit is complete.
Whirlpools is built on our belief that centralized liquidity will eventually power the majority of DeFi’s trading volume. Soon, we will invite other protocols to be a part of the future through our builders program, a program dedicated to funding protocols built on top of Whirlpools. Interested? Get ready now: Whirlpools' TypeScript SDK will be open-sourced alongside the beta release on March 24th!
Will Whirlpools still work when Solana network is slow?
Yes! Similar to constant product AMMs, trading and providing liquidity on Whirlpools can be completed with only one on-chain transaction. This is a major improvement over other capital-efficient dexes. For example, in an order book, a single order requires multiple transactions, making transactions less reliable (and more confusing).
Access to a decentralized marketplace that is both resilient and capital efficient is not only good for Orca, but also for the broader Solana ecosystem. During times of volatility, the best centralized exchanges outperform their competitors by maintaining uptime and limiting unnecessary cascading liquidations. Similarly, we designed Whirlpools to shine by providing exceptional service when there are spikes in activity on the Solana network.
Do you want to be a shark? We'll be diving into the #orcanautical channel on the Orca Discord regularly during the Orcanauts beta to hear what you guys think. We’ll also be encouraging our podcasting friends to help each other learn the art of focused fluidity! Fantastic contributions, such as guides on YouTube or Twitter to help others learn LPs, may be rewarded with a Swag… 😉
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