Spectrum

Combining both CLMM and order book styles into a DEX that operates across both the Ergo and Cardano blockchains.

formerly Ergo-DEX

Spectrum Finance operates on a Concentrated Liquidity Market Maker, CLMM, algorithm that enables liquidity providers, LPs, to select a range in which their liquidity will be available, thus reducing their personal slippage risk.

Orders are executed off-chain by “Off-chain executors” and, for the sake of efficiency, orders are broken into two stages: Order creation and execution. Once an order is submitted it is executed off-chain by bots. Transactions are then validated by an on-chain validation script.

The Ecosystem “Agents”

There are 5 economic agents in the Spectrum system:

Miners

Earn miner fees, paid in native tokens, for processing transactions.

UI Providers

Provide a better UI and earn fees, paid in native token, that are charged to the user for each operation done via the UI that they host.

Off-Chain Executors

Earn fees, that are paid as native tokens, for executing orders in both CLMM and order book environments. The fees, and thus the off-chain executors rewards, differ for each method of exchange.

Liquidity Providers

Provide liquidity and receive protocol fees, paid in tokens, accumulated in liquidity pools.

Traders

Use the DEX to swap tokens and pay fees on each trade.

Spectrum is currently live on the ERGO blockchain as an AMM style swap DEX. Order book functionality on ERGO is next, followed by the launch of an AMM style DEX on Cardano. The current roadmap will be finished with the release of order book trades on the Cardano blockchain.

Industry

DeFi

DEX

Tags

Swaps

AMM

Cross-chain

Catalyst Funded

Open Source

Order Book

NFT Collateral

CLMM

Ergo

Author

builtoncardano

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Links

Project Website

Glossary

Order Book

Order books are used to record and settle buy and sell orders placed by users in a traditional financial market. On decentralized exchanges, DEXs, operating an order book orders are placed into a smart contract at either a specific price or “market price” i.e. the current price. Market price orders are executed immediately against existing trades but orders placed at a specific price are locked into the smart contract and wait for orders to come along to fill them. This often means waiting for the price of the asset to move to the price they stipulated for their order. During this time the user’s assets are locked in the smart contract and are not available to the user.

Users are often given the ability to put “limits” on their orders, which is a time limit that automatically cancels the order if it is not fulfilled in the stated amount of time. This returns the locked assets to the user unchanged. Users are also given the ability to cancel these trade at any time, which, again, returns the assets to the user unchanged.

On-Chain

These are all the on-chain NFTs, and on-chain NFT collections, that currently exist on Cardano. Many people consider on-chain NFTs to be better, or more special, than off-chain NFTs.

In regards to the on-chain vs off-chain NFT argument, the image represented by an off-chain NFT is found by following a link, typically stored on the IPFS, from the NFTs metadata. This can be changed by the person who uploaded it. The image represented by an on-chain NFT is coded into the metadata and is, therefore, immutably coded into the blockchain's history. This is usually, but not always, in the form a language that your browser understands, allowing your browser to interpret that information and display the NFT.

DEX

Here is a Cardano DEX list for you to explore all the decentralized exchanges built on Cardano. There are multiple Cardano DEX projects for you to choose from, each with a different take on the DEX concept and the way of managing a decentralized exchange protocol.

Listed here are Cardano DEX projects that are based on both the automated market maker (AMM) and the traditional order book style of exchange. Both types of DEX on Cardano, like any other exchange, require a good amount of liquidity to operate effectively. This leads many to say that the best Cardano DEX is the one with the most liquidity. However, there are many other factors that the users of these DEXes would tell you to take into account before deciding which is the best Cardano DEX, and which one you should interact with (although a high amount of liquidity is a good indicator for users).

Interestingly, many Cardano exchanges, such as Sundaeswap, use the concept of “batchers” to collect, order, and execute transactions. This reliance on a small group of batchers to order and execute user transactions reduces the decentralized nature these exchanges as these entities could easily collude to front run transactions from particular wallets or to censor transactions from other wallets.

CLMM

A CLMM, Concentrated Liquidity Market Maker, is an extension of the AMM algorithm where LPs can provide liquidity to specific price ranges of a pool of assets. They can only earn fees when the assets are traded in their chosen price range. This helps LPs guard themselves again “Impermanent loss”, which is where the price of their assets changes between the time of deposit and withdrawal.

AMM

AMM stands for Automated Market Maker. This is an algorithm, often supplemented by oracles, that facilitates the pricing and exchange of assets between users. Assets are exchanged at market value through liquidity pools. These pools are created by Liquidity providers, LPs, who deposit assets to the exchange in pairs. This “asset pair” then allows users to swap one asset for the other through the liquidity pool. Fees are paid to the LPs who provided the liquidity. The more liquidity a pair has the less “slippage” a user experiences, meaning the less likely the user is to experience a price change in their trade.

The Ecosystem “Agents”

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