What is Duality?
Duality’s mission is to build fair, efficient, open markets. Our first iteration introduces a novel mechanism design which combines the computational efficiency of AMMs and flexibility of order books.
Duality's hybrid AMM - order book design is based on the insight that AMMs are just tokenized trading strategies on top of an order book. Following this design principle, Duality v1 was built as an order book and with support for tokenizing trading strategies (~= liquidity providing on an AMM). A large goal of this design decision was to give traders and liquidity the ability to express their preferences with more flexibility than existing decentralized exchanges). This supports
- Traders to choose between different order types (e.g., fill-or-kill, good-until, limit...)
- Liquidity providers to approximate any feasible AMM curve (liquidity distribution)
While two liquidity providers on Duality may prefer completely different liquidity distributions, if their distributions overlap in the chosen ticks (~prices) and spreads (fees), then the overlapping liquidity is pooled together. The only difference is the amount deposited in each pool. We call this feature shared liquidity because it has numerous advantages, such as reducing liquidity fragmentation and increasing the cost of price manipulation for traders and liquidity providers.
The hybrid AMM-order book design is also extremely capital efficient compared to most existing decentralized AMMs. This is because liquidity providers can concentrate their liquidity on a single tick (~price) and spread (fee). While trading through the pools associated with a single tick, traders will incur no slippage as every pool is constantly priced. This is especially useful for swaps between stable-coins and highly correlated assets (e.g., staked<>non-staked pools) where there is more likely going to be liquidity concentrated at a single price. It's worth noting that just because there is no slippage while trading at a single tick, this does not mean that there is enough liquidity at every tick to complete every order, so for many trades, slippage will be incurred.
Computer scientist Alan Kay famously said that those who are serious about software build their own hardware. We believe that communities which are serious about decentralized applications, own their whole stack.
App-chains (and soon app-rollups) open up a rich design space of unexplored possibilities that can solve some of DeFi’s most urgent problems.
- 1.Transaction ordering and inclusion logic can be expressed in ways not feasible on generalized smart contracting chains to gain more control over the impact of MEV on a decentralized application.
- 2.Expensive transactions fees and network congestion due to sharing a network with unrelated applications becomes less of an issue with app-specific infrastructure.
- 3.Block times can be modified to reduce problems with adverse selection for market makers.
Duality strives to be a hub of innovation for pushing the boundaries of what is possible with app-specific infrastructure.