Concentrated Liquidity Pools for Wingriders V3
Dear Riders, this is a proposal designed to significantly enhance the competitiveness of the Wingriders DEX by implementing concentrated liquidity pools in V3, following the pioneering mechanism introduced by Uniswap V3.
Motivation
The DeFi landscape on Cardano is evolving rapidly. Competing DEXs have already begun deploying concentrated liquidity mechanisms, and Wingriders risks falling behind if it does not act. Capital efficiency is now a primary concern for serious liquidity providers: under the current constant product model (x·y=k), liquidity is spread uniformly across the entire price range [0, ∞), meaning the vast majority of deposited capital sits idle at price ranges that are rarely or never traded.
Concentrated liquidity fundamentally changes this dynamic by allowing LPs to allocate their capital within a custom price range, dramatically increasing the effective depth of the order book at the prices where trading actually occurs. This translates into lower slippage for traders, higher fee income per unit of capital for LPs, and a stronger TVL narrative for the protocol.
The competitive pressure is no longer theoretical. Protocols offering concentrated liquidity on Cardano are actively attracting the liquidity providers and volume that would otherwise flow through Wingriders. We cannot afford this handicap.
Goal
Implement concentrated liquidity pools in the Wingriders V3 upgrade, enabling liquidity providers to define custom price ranges for their positions, thereby:
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Maximising capital efficiency for LPs and making Wingriders the most attractive venue for professional market makers on Cardano.
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Reducing price impact and slippage for traders, increasing volume and fee revenue across the protocol.
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Restoring and strengthening Wingriders’ competitive position against DEXs already offering this feature on Cardano.
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Indirectly benefiting WRT token holders through higher protocol revenue generated by increased trading volume.
Relevant Points
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Under the current constant product model, LP capital is deployed uniformly across all possible prices. In practice, most trading activity is concentrated within a narrow price band, meaning a large fraction of TVL generates no fees at any given time.
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Concentrated liquidity allows LPs to set a lower bound ¶ and an upper bound (Pb) for their position. Within that range, their capital behaves as if it were a much larger constant product pool, multiplying fee-earning efficiency by a factor that can reach 100x or more for tightly managed positions.
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The existing fee structure (0.35% total for constant product pools; 0.06% for stableswap pools) would remain unchanged. Concentrated liquidity is a change to the AMM mechanism, not to the fee model, so it carries no negative impact on trader costs and no reduction in LP fee rates.
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Stableswap pools, which already benefit from a curve optimised for pegged assets, would remain as a separate pool type. Concentrated liquidity pools would be introduced as a third pool type, giving LPs the choice of mechanism best suited to the asset pair they wish to provide liquidity for.
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LPs in concentrated positions accept a higher degree of active management responsibility and exposure to impermanent loss if prices move outside their chosen range. Clear UI warnings and educational documentation must accompany the V3 release.
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The development scope for V3 should include: an updated interface with a range selector and position management dashboard, and an LP analytics module displaying in-range/out-of-range status and estimated APR per position.
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A reward of 10,000 WRT would be offered for the time spent developing this proposal, the risk associated with staking locked funds in the event of an unsuccessful vote, and the current market value of WRT.
Community Improvement Portal Discussion
https://discord.com/channels/915937361286795334/1007285274792955935