Introducing, The Sushi Next Generation AMM: Trident

An Expansion of Pool Type Options

As of now, many decentralized exchanges rely on the constant product pool formula as their infrastructure. Trident is intended to be, at minimum, a superset of all AMM pool designs, by adding multiple pool types to provide relief for many of the pain points experienced due to the siloed liquidity problem and to protect users from price impacts and other risks that are faced by cryptocurrency holders.

Due to the nature of DeFi, technology, ideas and possibilities go from ideation to implementation at lightning-fast speeds and to ensure that the Sushi protocol is prepared for unforeseen updates to the DeFi horizon, Trident allows for simple integration of added pool types. This integration is made possible by standardizing the pool interface which allows adding new pool designs as long as they conform to the interface; Told you that without this explanation you would barely notice it!

New Pools

Initially, Trident has been developed with four pool types, the first should look a little familiar to say the least.

Constant Product Pool
To refresh your memory, constant product pools are made up of two assets at an equal monetary value of each. To better explain, if you wanted to add $200 of liquidity to the current Sushi AMM’s SUSHI-WETH pair, you would have to add $100 of SUSHI tokens and $100 of WETH tokens to complete your transaction. If you only have $80 worth of SUSHI tokens, than you can only match it with $80 worth of WETH to make a $160 addition of liquidity to the AMM. Luckily, thanks to the zap in/zap out feature, these limitations are no more! You can add any amount of assets and we’ll swap the for you behind the scenes to make everything evened out.

In this pool type, swaps function automatically, hence the term Automated Market Maker (AMM), thanks to the formula: x*y=k, also known as the, constant product formula.

Hybrid Pool
Hybrid pools were included to allow users to swap like-kind assets at reduced price impacts. In hybrid pools, users can include up to 32 assets in just one pool! Based on a stableswap curve, this allows for similar assets to be traded amongst one another in a single pool, with less interference from other market factors or obviously dissimilar tokens.

Concentrated Liquidity Pool
One of the more exciting pool types to splash onto Trident is the concentrated liquidity pool, which asks users to specify the token asset’s price range to add liquidity to.

Traditionally, when you are a liquidity provider on SushiSwap, you receive platform transaction fees from swaps within your LP pool at a rate of your share of the entire pool itself, regardless of a token’s price. As DeFi protocols, such as Sushi, increase in popularity, your share of the pool can get smaller and smaller, until it’s almost miniscule. This pool style aims to tackle that lack of LP incentivization due to unattractive pool shares.

As shown in the picture to the left, liquidity providers will be able to select the token price range in which they wish to receive platform fees. This is in the hopes that the amount of the pool that you need to share with fellow providers will spread more evenly between several ranges, offering you a bigger piece of the pie in your selected range, which means in higher fee accumulation.

For concentrated liquidity pools the ultimate benefit is that it will allow liquidity providers to more narrowly scope their liquidity provisioning to maximize share of revenue they receive from platform swap fees across Sushi.com.

Weighted Pool
Weighted pools will be similar to constant product pools with the exception that the pools allow different weight types, breaking the limitation of requiring a 1:1 value match between both assets in a pair, as is the case with constant product pools. Even better, weighted pools can support up to 8 tokens at the same time.

Again, weighted pools allow liquidity providers to specify the percentage of each asset in the pair. Being no longer restricted to 50% — 50%, users will have the ability to give 20% of the pool in one asset and 80% of the other, just as long as together they total 100%.

To use the illustration above, let’s say you had $80 worth of SUSHI tokens and $100 worth of WETH. Together you can add $180 worth of liquidity, with your $80 of SUSHI tokens making up 44.44% of the pair and your $100 in WETH comprising of the remaining 55.56%.

A constant product pool has 50/50 weights of Token X to Token Y. Weighted pools will allow an arbitrary weight of Token X to Token Y. The advantage of this pool type is that it shifts the price impacts by the token weights.

Source: https://medium.com/sushiswap-org/introducing-the-sushi-next-generation-amm-trident-7dea6aa3cbc2?source=rss——-8—————–cryptocurrency