Help us test concentrated liquidity on Liquidswap

Liquidswap will be the first AMM on Aptos to offer concentrated liquidity for increased capital efficiency and APR. It’s already live on testnet, and we kindly ask you to help us test it. Your feedback is precious: it will help us improve the product for mainnet.

What is Pontem CLMM?

CLMM stands for Concentrated Liquidity Market Maker. Concentrated liquidity is a DEX feature that allows users to deploy capital in a range  where most of the fees are generated. Your money can work more efficiently and earn you a higher APR. For a very detailed explanation, see our Concentrated Liquidity Guide.

The first DEX to introduce concentrated liquidity was Uniswap V3, followed by TraderJoe on Avalanche. Pontem is the first on Aptos to introduce concentrated liquidity with Liquidswap V1.0 pools.

Our CLMM uses the best practices from Trader Joe’s product, Liquidity Book, but with important differences – for example, we have NFTs instead of LP tokens.V1.0 pools allow you to deploy much less capital and still earn the same in fees as someone who deploys several times more liquidity in a V0.5 pool.

We need your help to test Pontem CLMM

Your feedback constantly helps us make all Pontem products better. And as concentrated liquidity is such an experimental feature, we need to hear your opinion more than ever. So we decided to make the current version available on testnet for community testing.

Every opinion is important. What should we add or remove? Are there bugs when using specific browsers or devices? Would you use the CLMM – and if not, why? Your opinion will determine what the final product looks like.

A couple of important points

1) Concentrated Liquidity is an advanced feature for seasoned liquidity providers only. Everyone can participate in the testing, but if you don’t have any experience with Uniswap v3 or Trader Joe, the learning curve will be steep. We’ll publish a more detailed tutorial shortly.

2) Pay close attention: Pontem will not conduct an airdrop or retrodrop for community-driven concentrated liquidity testing. We will, however, compensate some testers based on their valuable feedback on a competitive basis. Details can be found on our official Twitter or Telegram.

2. Liquidity bins, price range, and liquidity shapes

The interface for adding liquidity to a V.1.0 pool on Liquidswap is different from a regular pool. The pool is divided into liquidity bins – a sort of mini-pools with one bin for every price level (tick). The price gap between two adjacent bins is called a step. A bin step of 1 corresponds to a 0.01% change in price, so x5 is 0.05%. On Liquidswap, there are different bin steps for different pools.

At any moment, only one bin can be active - the bin that corresponds to the current price. The tokens for the swaps are taken from this bin. Once the supply of one of the tokens, trading switches to the next bin.

All the bins except for the active one contain just one type of token (X or Y). Only the active bin earns you trading fees, so you need to make sure that you have some capital deployed in the active bin. You can spread the funds across several bins to cover the price range where you expect the token pair to trade. If the price goes to a bin where you don’t have any tokens, you won’t earn any fees.

Bin radius is the number of liquidity bins on either side of your target price. If you set it to 20, the position will cover 20 bins on either side of the target price, so 40 bins in total.

Liquidity curve shapes determine how your funds are distributed within the range:

• Spot – equally among all bins;
• Curve – concentrated around the center of the range;
• Bid-Ask – more of the funds are placed at both ends of the range;
• Wide – like Spot, but with more bins.

We’ve added tooltips to each shape, explaining the recommended bin radius and how often you have to rebalance the position. It doesn’t matter much for the testing purposes which one you use, but it will be crucial to understand the differences once you use the CLMM on mainnet to earn LP fees. Don’t worry – we’ll provide a detailed tutorial soon.

NFTs instead of LP tokens

When you open a liquidity position, you won’t find traditional LP tokens in your wallet. Instead, special NFTs are generated – and then burned when you withdraw the liquidity. They are actually semi-fungible, and you’ll receive quite a few with each position. These NFTs can be transferred to other accounts and even sold, just like any NFT.

Note that there is no direct correspondence between the number of NFTs and the amount of funds you put in the pool: how many NFTs you’ll get also depends on the price range and other factors.

How to test the CLMM

1) Switch Pontem Wallet to testnet. If you don’t have testnet APT, click on Faucet in the wallet a few times: you will get 1 APT every time. If the wallet balance doesn’t update, switch to a different account and then back.

2) Go to the CLMM Test page and connect the wallet. Click on Aptos Faucet to request testnet USDT and BTC.

3) Go to Earn → Pools. So far we’ve added two V1.0 pools: APT-USDT and BTC-USDT. It doesn’t matter which one of them you test.

4) Start adding liquidity. Play with different shapes, price ranges, and bin radius settings. Start with the simple Spot shape and then try other shapes, observing how the My Liquidity diagram changes every time. Check how your NFT balance changes in the wallet, too.

5) Try redeeming the liquidity in different ways (Remove Both, Remove USDT, etc.) and check how CLMM NFTs disappear from your wallet balance.

6) Along the way, please write down your feedback in a document. We’ll really appreciate it if you add screenshots or even make a video to show us exactly what you’d like us to change, or if you encounter a bug. Any detail is important.

7) Please submit your feedback to the Telegram group or Discord – preferably as a Google Doc, but a simple message will work, too.

Once again: there is no monetary reward for it. But if you help us make the CLMM better now, you’ll have a better experience with it as a liquidity provider on mainnet - and hopeful will earn a better APR!

Pontem thanks you in advance. Enjoy testing!