Concentrated Liquidity
Algebra Integral CLAMM
THENA V3 integrates Algebra Integral, the latest evolution of concentrated liquidity AMMs and a powerful alternative to Uniswap V4. While maintaining the core advantages of concentrated liquidity—capital efficiency, custom price ranges, and fee optimization—Algebra Integral introduces a new layer of modularity and upgradability through its hook-based architecture.
Plugins
Algebra Integral pools support a "hook" system—external smart contracts that plug into the core AMM to execute custom logic before or after any pool interaction (e.g. swap, mint, burn). This modular design enables THENA to embed new features and compliance logic without redeploying liquidity pools.
Use Cases
AML/KYC Compliant Pools: THENA has developed, in partnership with Brickken, a proof-of-concept plugin that enforces identity and eligibility checks to onboard specific tokenized RWAs. This enables compliant access control, making it possible to onboard institutional partners and regulated assets in full alignment with applicable frameworks.
veTHE Fee Tiering Plugin [R&D]: Dynamic fee discounts based on veTHE position size, reinforcing community loyalty and veTHE locking rate.
Options Market [R&D]: Hook enabling options trading markets to attract advanced user or enable Market Neutral Strategies directly on THENA.
Concept of Concentrated Liquidity
In the classic Uniswap V2 AMM, liquidity is evenly distributed across the entire price curve of the token pair (0, +∞), equally rewarding dormant liquidity and liquidity effectively utilised for end-user swaps. DEX utility tokens emitted to rent LP liquidity are not capital efficient, and fees cannot be directed towards liquidity actively used for swaps.
Concentrated liquidity pools enables the discrete allocation of the liquidity within specific price ranges, allowing them to collect trading fees when the current price falls within the established range. Similar to an order book, the aggregated liquidity exhibits a more "concentrated" distribution around the market price of the token pair. For end-users, concentrated liquidity provides better price execution than UniV2 pools for any given level of TVL, while more efficiently rewarding LPs.
Impermanent Loss Risk
In concentrated liquidity pools, passive LPs are more subject to impermanent losses. As the price shifts, LPs end up holding more of one asset while traders acquire more of the other. LPs may eventually hold a single asset position as the price of the pair approaches either the lower or upper limit of the range. The situation can worsen when the price surpasses one of the boundaries: the LP position now consists of a single asset that is decreasing in value and not generating trading fees.
Given the inherent volatility of the crypto market, LP positions in concentrated liquidity pools need frequent rebalancing to avoid extreme impermanent losses. Although concentrated liquidity pools bring a higher level of granularity to DeFi, profiting from liquidity provision within custom ranges demands sophisticated market-making skills that may be beyond the reach of the average retail liquidity provider.
Fee Structure
Algebra Integral CLAMM includes a dynamic fee structure composed of:
Base fee: Base component that can be freely set and modified by the core team without needing to redeploy liquidity to a new pool. This feature offers an extra layer of flexibility for THENA's protocol partners when executing their liquidity strategies on the BNB chain.
Dynamic fee: Component that automatically adjusts according to market volatility, liquidity, and trading volume to maximize generated fees. During periods of high volatility, fees should be increased to compensate for potential losses faced by liquidity providers. Conversely, when trading volume is low and there is sufficient liquidity, fees should be reduced to attract more volume.
Manual Concentrated Liquidity Provision
Select your farming rewards
Manual Concentrated LPs can choose between earning $THE or Trading Fees:
$THE: veTHE holders vote on a single gauge per pool, and emissions are streamlined over the Epoch based on 1-second live LP performance. Whether a position is managed manually or by a whitelisted Liquidity Manager, emissions flow proportionally to their fee contribution
Fees: LPs earn 90% of the trading fees generated by their positions. Trading fees are not autocompounded in the position and needs to can be claimed on the Dashboard section
Select your range
LPs can adjust their liquidity ranges within a visual environment displaying the recent volatility and liquidity depth distribution in the pool.
The lower section represents the liquidity depth summed between all ticks within the liquidity pool
The upper section displays the historical price volatility of the pair over the selected timeframe
Visualise the estimated APR
The estimated APR reacts dynamically according to the user price range selection and is based on the past 7-day performance of the pool.
Zapper function - powered by Kyber
LPs can enter any pool using a single token, all in a single transaction: swapping the necessary amount into the second asset (handling ratios and price ranges) and providing liquidity.
Automated Concentrated Liquidity Provision: ALMs Integration
The integration of concentrated liquidity pools with various Automated Liquidity Managers ("ALMs") addresses the complexity of these pools for liquidity providers seeking automation. ALM protocols automatically manage position ranges to optimize fee generation while mitigating impermanent loss, enabling passive yield generation without the need for active & manual rebalancing.
ALM partners integrated natively integrated:
Last updated