Introduction

The Oyster AMM model builds upon the foundational architecture of SynFutures’ sAMM model while taking a significant leap forward to introduce the following features.

Single-Token Concentrated Liquidity for Derivatives

The Oyster AMM model facilitates liquidity concentration within specific price ranges and incorporates leverage to increase capital efficiency. Unlike prevalent spot market-focused liquidity models such as UniSwap v3, the Oyster AMM introduces a margin management and liquidation framework tailored specifically for derivatives. Moreover, this model embraces the concept of two-sided liquidity while utilizing just a single token, eliminating the necessity to provide liquidity for both ends of a token pair. This streamlined approach enhances the efficiency of the trading ecosystem, making it even easier for traders to take advantage of SynFutures’ permissionless listings feature established in previous iterations of the protocol.

Fully On-chain Order Book

The AMM model democratizes market access, offering automated “market maker” functionality even for niche assets, enhancing diversity. However, this comes at the expense of capital efficiency as AMMs demand significant liquidity for equivalent price impact compared to order book models. Order book models don’t often offer volatile digital assets due to complex infrastructure and risk management concerns. However, they are ideal for capital efficiency, concentrating liquidity around mid-price. With that in mind, we also introduced an order book model in SynFutures v3. After evaluating off-chain and hybrid alternatives, we chose a fully on-chain approach for the order book, guaranteeing transparency, trustlessness, and anti-censorship. The model promises security and robustness by eliminating dependence on centralized administrators to process orders with the potential for “backdoors” and mitigating vulnerabilities across on-off chain systems, including order management matching and executions in alternative models.

Single Model for Unified Liquidity

The Oyster AMM introduces an innovative liquidity paradigm by seamlessly integrating concentrated liquidity and order book in a single model, offering a unified liquidity system tailored to active traders and passive liquidity providers. This cohesive approach ensures traders can enjoy efficient atomic transactions with predictability. Conversely, in systems that combine on-chain AMM with off-chain limit order systems or separate on-chain limit order systems, trade requests are split between these systems, leading to inefficiencies, non-atomic execution, and unpredictability. This dual-process execution risks non-synchronization, potentially leaving the AMM to process the transaction while the order book system falters, introducing potential confusion if the order book operates off-chain.

Stabilization Mechanism for User Protection

The Oyster AMM introduces advanced financial risk management mechanisms from past protocol iterations to enhance user protection and price stability. These mechanisms include a dynamic penalty fee, which discourages price manipulation by imposing penalties for significant deviations between trade prices and mark prices. The dynamic fee system also balances the LP’s risk-reward profile. The other is the stabilized mark prices mechanism, which uses an exponential moving average process to mitigate the risk of sudden price fluctuations and mass liquidations.

Battle-tested across 3 Versions

  • The best practices in TradFi and CeFi are implemented to enable users to confidently trade on a protocol that's been tried and tested through multiple market cycles

  • 23.14 billion in cumulative trading volume

  • 111.6K all-time traders

  • 246 pairs listed

Backed by Industry Leaders

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