V2 AMM

Lumnia's V2 AMM is built on the tried-and-true UniV2 constant product formula, but with powerful enhancements and custom implementations to better serve both users and protocols. Designed as a cornerstone of Lumnia's ecosystem, the V2 AMM focuses on delivering:

• Flexibility and customization to meet the needs of diverse protocols.

• Efficient and optimized trading for all users.

• Support for protocol growth by adapting to their specific requirements.

These principles have shaped the development of Lumnia's V2 AMM, which introduces advanced features such as a dual-liquidity model, dynamic directional fees, and a swap referral mechanism to incentivize collaboration with other applications.

---

1. Dual-Liquidity Model

Lumnia's V2 AMM allows liquidity providers (LPs) to choose between two distinct liquidity models, depending on the anticipated price correlation between the two tokens in a pair.

Volatile Pairs:

• Designed for assets that are not correlated, such as SNT/LUM or LUM/LUSD.

• Utilizes the constant product formula (x * y = k), which ensures liquidity across the entire price curve.

Stable Pairs:

• Tailored for assets with a high degree of correlation, such as stablecoins or tokenized derivatives.

• Employs a Solidly-inspired curve (x³y + y³x = k), which maintains a narrower price range and enhances efficiency for swaps with minimal slippage.

By supporting both volatile and stable pairs, Lumnia's AMM provides LPs with the tools to optimize their strategies while enhancing the trading experience for users.

---

2. Dynamic Directional Fees

Lumnia's V2 AMM recognizes that a one-size-fits-all approach to fees isn’t suitable for all scenarios. To address this, the AMM introduces dynamic and directional fees that adapt to market conditions and the unique needs of protocols.

Dynamic & Directional:

• Swap fees can be fully customized for each trading pair.

• Distinct fee values can be applied based on the direction of the swap (e.g., buying vs. selling).

• This flexibility allows Lumnia to incentivize specific behaviors, such as:

  • Encouraging buying activity for new tokens to stabilize prices.

  • Reducing selling pressure for newly launched projects.

  • Adapting fees for volatile or stable assets based on market conditions.

Fees Handling Delegation:

• Partner protocols launching on Lumnia's AMM can define custom fee structures for their liquidity pools.

• This allows projects to align swap fees with their individual strategies, whether to support growth, stabilize prices, or reduce trading costs.

By empowering protocols to manage their own fees, Lumnia fosters a collaborative ecosystem that aligns with the goals of its partners.