Exploring the Centralized Liquidity Protocol Cetus in the SUI Ecosystem

Cetus, as a decentralized exchange and liquidity protocol based on the Move ecosystem, utilizes an algorithm similar to Uniswap V3 to build a concentrated liquidity protocol and its related functions. The protocol aims to provide DeFi users with a high-quality trading experience and greater capital efficiency, while fully leveraging the unique ecological characteristics of SUI to create distinctive composable features.

Characteristics of On-chain Cryptocurrency Trading Markets and the Role of DEX

The on-chain cryptocurrency trading market, although relatively small in scale, is growing rapidly. A major characteristic of this market is that most assets belong to low liquidity and low market cap categories, with a large number of new assets emerging daily, creating a strong demand for price discovery. In this context, how to better achieve price discovery and attract liquidity has become the key to the prosperity of on-chain trading. Therefore, we believe that DEX should primarily serve liquidity providers (LP).

The demand for LP varies in different trading scenarios. We can categorize on-chain assets into two types: mainstream assets (the top ten by trading volume on major public chains) and long-tail assets, which have different LP demands.

• Mainstream LP: Pursuing higher fee income and less impermanent loss
• Long-tail asset LP: Requires a more economical, controllable, and flexible market capitalization strategy

In the long run, the V3 model with higher capital efficiency is the trend, but due to differences in demand, Uniswap V2 and V3 can coexist in the market. However, the market will inevitably give rise to new players that can meet both demands. In an emerging ecosystem like SUI, Cetus has shown stronger competitiveness.

Cetus: The Pioneer Concentrated Liquidity Protocol DEX of the Move Ecosystem

Cetus has currently launched a complete product line including Swap, permissionless Liquidity pools, and cross-chain bridges.

Concentrated Liquidity

Cetus adopts a concentrated liquidity market-making algorithm similar to Uniswap V3. LPs can create multiple positions in the same pool, simulating various price curves by setting different price ranges to implement customized strategies.

Build Pool Without Permission

Cetus allows users to create liquidity pools without permission, and project parties can also freely launch new tokens on the platform. This feature helps attract early projects and quickly establish pricing power over long-tail assets.

Flexible trading fees

The platform offers multiple trading fee tiers (0.01%, 0.05%, 0.25%, 1%), allowing users to choose based on their needs. This design encourages the market to autonomously seek the best liquidity allocation solutions, providing greater flexibility for LPs and trading users.

Position Auto Management

Users can implement take profit and limit orders based on range orders. At the same time, the platform supports the integration of third-party position managers to reduce liquidity management difficulties, especially suitable for long-tail asset LP.

Composability

Cetus supports high composability, allowing other projects to easily establish exchange interfaces on their own frontends by integrating the Cetus SDK, providing quick access to Cetus's liquidity.

Secure Cross-Chain Bridge

The cross-chain bridge built by Cetus based on Wormhole technology was launched in November last year, supporting the secure and convenient cross-chain transfer of assets from nearly 20 public chains.

Strongly correlated token economic model

Cetus adopts the xToken economic model. Users can earn protocol revenue sharing by holding CETUS tokens and xCETUS, ensuring alignment of interests between the community and the protocol.

Cetus Team: Experts in the Development of Centralized Liquidity Market-Making Algorithms

Behind Cetus is a DEX team with rich development and operational experience. Their APTOS version has been deployed and is running stably. With high-quality products, strong ecological BD capabilities, and continuous operational narrative abilities, the Cetus team is expected to become a leader in CLMM infrastructure within the SUI ecosystem.

DeFi Innovations Spawned by Concentrated Liquidity Protocols

LP Automated Liquidity Management Protocol

This type of protocol can help LPs automatically execute market-making strategies to cope with situations where market prices exceed the strategy's range. Leading projects like Arrakis Finance have reached a TVL of $440 million.

These protocols can also achieve:

• Unilateral Asset LP Mining
• Issue liquid and re-mortgageable ERC20 LP tokens for LP providers

New Gun Pool and Leveraged Mining

Under the CLMM algorithm, capital advantages are amplified, allowing professional institutions to implement more customized strategies. The machine gun pool can adopt an active and robust strategy to generate returns, creating significant value for large-scale users.

New Derivative System

Under the CLMM system, how to construct derivatives that can hedge the market-making risks for LPs to mitigate the losses in LP interests caused by malicious dumping of the project is an area worth paying attention to.

Summary

The Cetus team demonstrates mature product delivery capabilities, strong ecological BD capabilities, and excellent operational capabilities. They have a deep understanding of DEX products and the track. We believe that Cetus has a great opportunity to become an industry leader in a unique ecosystem like SUI.