FAQ

Concentrated liquidity market maker (CLMM)：CLMM is a type of advanced market maker algorithm designed for Dex platforms. It allows liquidity providers to add liquidity in their specified price ranges, instead of uniformly spreading along the infinite price range like the traditional AMM model does.

AMM: Automated maker maker, the most common market maker algorithm that is used by current DEX platforms. It follows the constant production equation x*y=k to uniformly distribute liquidity along the entire price curve.

Automated Liquidity Placement (ALP): ALP is a mechanism used in decentralized finance (DeFi) protocols to automatically manage and optimize the distribution of liquidity within liquidity pools. The ALP mechanism responds to trading activities and price movements by dynamically adjusting the allocation of assets in the pool. As traders execute swaps and impact the price of assets, the ALP system recalibrates the liquidity distribution to ensure that it aligns with the changing market conditions. This helps to maintain efficient trading and reduce impermanent loss for liquidity providers.

Position: When there is a user providing liquidity in CLMM, a liquidity position will be created with its relevant parameters to be recorded, such as its liquidity amount, price range, etc.

Price range: The range between the minimum price and maximum price that a liquidity provider sets when adding liquidity to CLMM pools.

NFT: Non-fungible token, a type of token that has the uniqueness to distinguish itself from another NFT. Because every NFT is different, it can be used as a media to record or represent different information, content or priviledge.

CLMM NFT: Because every user’s liquidity position is different in CLMM, Crema generates a unique NFT for every position that liquidity providers create. This NFT records the corresponding information for this liquidity position including its liquidity amount, price range, etc. Only the user who owns the CLMM NFT in their wallet can manage and take actions on the respective liquidity position.

Farming: Also known as liquidity mining. It is a popular feature that is adopted by AMM-dex to incentivize their liquidity providers. In AMM, liquidity providers will get LP tokens as the proof of their liquidity provision. These LP tokens can be staked into the corresponding farming pool to earn rewards.

NFT Liquidity Farming：It is the unique farming function provided by Crema. Because liquidity providers get CLMM NFT from Crema instead of common fungible LP tokens that traditional AMM dex gives, Crema’s farming pool requires liquidity providers to stake their CLMM NFT to earn farming rewards.

Fee Performance Strategy：One of the farming incentive strategies of Crema. This strategy determines the rewards to every user according to the fee performance of their positions. The system will scan the newly generated fees out of all the positions in the CLMM pool, and then calculate the proportion of the fees generated by every user position accounting for the total fees. This proportion will be used as the value to determine the reward ratio to every user.

Overlapping Range Strategy: It is one of the farming incentive strategies designed by Crema. It will compare the farming reward range and user's liquidity position price range to find out the overlapping range. Only the liquidity within the overlapping range will be considered to be effective liquidity, which is eligible for receiving farming rewards.

High-Efficient Range: It is the price range of a liquidity pool in which the liquidity is most likely to be utilized by traders, which shows the best transaction fee earning performance. It is usually very close to the current market price.

Reward Range: Under the overlapping range strategy, there will be a reward range for the farming. Reward range is usually set following the high-efficient range. For example, for those stablecoin pairs and pegged-asset pairs, the reward range is nearly around 1, like (0.999-1.001).

eLP Value: It is the effective liquidity value of a user's NFT liquidity position, the value Crema will take into account when calculating the farming reward distribution. The calculation of eLP Value is different in different farming incentive strategies.

Range Order: Based on CLMM, users can set specified price ranges for their liquidity positions to place range orders. It is similar to the limit order trading in CEX but transactions are executed within a price range instead of a specific price.

Cross-Chain Swap: With Crema's CLMM pools and smart routers to be deployed on both blockchain networks, as well as the integration with cross-chain bridges, users can trade any tokens from Chain A to any tokens on Chain B with a very low price slippage.

CRM: Crema’s official token. It is mainly used for incentivizing traders, liquidity providers, partners and all important roles in the Crema ecosystem. It also encourages more users to participate in the governance of Crema Finance.