Shadow Exchange: Sonic on-chain liquidity innovator

Officially launched on January 1, 2025, Shadow Exchange is a decentralized exchange built on the Sonic Blockchain, operating on the innovative x(3,3) model, which is a highly flexible and easy-to-start incentive model.

Why choose Shadow Exchange? 🔶

Among the many decentralized exchanges on the Sonic Blockchain (DEXs), you might ask: "Why do we need another one?"

Shadow Exchange is a user-centric native creation.

In response to market demand, we offer trading solutions that prioritize flexibility and efficiency. Not only have we broken through the limitations of traditional AMM models, but we also fully leverage the on-chain advantages of Sonic Chain's high transaction throughput (TPS) and instant confirmation of transactions (Finality).

Core Features 🔶

Concentrated Liquidity (Concentrated Liquidity, CL)

Voting pool dividend customized fee

x(3,3) mechanism

Dual Emission (Emission)

Dynamic Fees (Dynamic Fees)

Competitive Mining

Born for Sonic 🔶

Through sub-second block processing and instant transaction confirmation, Shadow offers an ultimate trading experience perfectly matched with Sonic. Liquidity provider (LP) can instantly adjust positions to seize market opportunities, while traders can enjoy high-efficiency trading with nearly zero slippage.

Shadow also makes good use of Sonic's FeeM mechanism. It returns 90% of the Gas cost to users, further enhancing dynamic fees and MEV arbitrage efficiency, thus improving the overall user experience.

Centralized Liquidity 🔶

Shadow has optimized centralized liquidity, aiming to enhance capital efficiency and reward liquidity providers. Participants can trade freely, allocating funds within a specific price range, with the potential for higher returns compared to traditional liquidity pools.

Concentrating capital in the most effective price range, Shadow not only brings better returns to LPs but also offers traders smaller spreads and stable prices, regardless of the total liquidity scale.

Concentrated Liquidity Range

Custom Fee Dividend 🔶

In addition to centralized liquidity, Shadow also offers a custom fee dividend mechanism for liquidity pools. The fee income and distribution can be adjusted based on the expected volatility and risk of each liquidity pool.

Popular high trading volume token pairs like S/USDC can choose to directly receive fee dividends; while emerging or highly volatile token pairs can attract liquidity through SHADOW emissions.

Optimizing transaction fee dividends helps achieve self-sufficiency and continuously attract funds. The project party can design the most suitable reward structure according to their own needs.

Dual Emission 🔶

Between liquidity pools with a voting mechanism (Gauge) and those without a voting mechanism, Shadow offers multiple reward options. The following are the preset fee distribution ratios:

Dynamic Fee 🔶

The algorithm of Shadow will automatically adjust the transaction fees based on market conditions and trading volume. According to the FeeM mechanism, the transaction fees can change at least once every 30 seconds.

Although dynamic fees are not a new concept, Shadow's system monitors the trading volume changes of other DEX and CEX simultaneously, thus providing better performance and price stability during price fluctuations.

Competitive Mining 🔶

Competitive mining rewards the most productive and competitive liquidity. Under the centralized liquidity model, users can freely set any price range from 0 to ∞ to provide liquidity.

Advantage

The more precise the range, the higher the reward. This aligns the interests of liquidity providers with Shadow. The incentive design is designed to increase the trading volume of the pools, making them the preferred liquidity pools for aggregators. Pooled liquidity is more efficient in channeling trading volume than traditional liquidity pool (v2 pools). As the trading volume increases, so do the fees generated by the pool, and these actual yields are returned to liquidity providers and xSHADOW stakers.

How is it different from other models?

Concentrated liquidity is 80-100 times higher in price accuracy and efficiency than Uniswap V2, leading to a proportional increase in fees generated. However, the smaller the position range, the greater the impermanent loss risk. Users should frequently monitor their positions to minimize risk. On the Sonic chain, position management is more efficient and responsive.

On Shadow, all users will receive corresponding returns. The more accurate the position range, the more active the liquidity, and the greater the profits!