# 💧 AMM & Liquidity

### V3-style DEX

* Concentrated liquidity
* Lower fees, tighter spreads
* Dynamic APRs based on TVL and trading activity

KaspaFinance features a next-generation **Automated Market Maker (AMM)** based on the Uniswap V3 model — enhanced by the speed and parallelism of the Kaspa DAG Layer 1. The AMM is at the heart of KaspaFinance's trading engine, enabling fast, permissionless swaps and efficient price discovery across key pairs like $KAS, $KFC, $USDC, and $ETH.

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#### 🔁 How Our AMM Works

Unlike traditional DEXs where liquidity is distributed evenly across all price ranges, our **concentrated liquidity** model allows liquidity providers (LPs) to **select specific price ranges** in which to deploy capital.

This approach offers:

* **Tighter price curves**
* **Lower slippage for traders**
* **Higher capital efficiency** for LPs

Each pool on KaspaFinance acts as a **liquidity bin**, and trades are routed across bins that best match a user’s price range.

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#### 💰 Fee Tiers

Each liquidity pool may offer different **fee tiers**, enabling LPs to choose a strategy that matches their risk profile and expected volatility:

* **Low fee (0.05%)** – Ideal for stable pairs like KFC/USDC
* **Medium fee (0.3%)** – Balanced risk/reward, typical for KAS/ETH
* **High fee (1.0%)** – Suitable for exotic or volatile token pairs

These fees are:

* Paid directly to LPs based on usage of their capital within the selected range
* Collected automatically into the pool and claimable at any time

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#### 🧮 Capital Efficiency

Thanks to concentrated liquidity, LPs can:

* Deploy capital within tighter bands where price action is likely to occur
* Reduce idle liquidity
* Earn higher fee income with less total value deposited

For example, instead of providing $10,000 across the entire price spectrum, a user could provide $2,000 between $0.35–$0.50 for the KFC/USDC pair — earning more fees if trades stay in that zone.

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#### 📊 Dynamic Liquidity Management

KaspaFinance’s AMM system includes:

* **Liquidity Mining Incentives** – Earn additional $KFC for LP positions
* **Auto Rebalancing Tools (coming soon)** – Recenter your range automatically
* **Liquidity Analytics Dashboard** – Visualize where your liquidity sits and how it's performing

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#### 🔗 Interoperable Pools

All liquidity pools are:

* Permissionless (anyone can create a pair)
* Token-agnostic (as long as verified via KFC governance or whitelisted UI)
* Composable with other modules (e.g., LP tokens can be staked in farms or used as lending collateral)

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#### 🧠 AMM Benefits on Kaspa DAG

Kaspa’s blockDAG enables an **unmatched trading experience**:

* Parallel block production = faster pool updates and transaction confirmations
* Reduced latency during volatile markets
* No MEV congestion or reorg-induced slippage
* Enhanced UX for arbitrage, routing, and real-time arbitrage opportunities

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#### 🌐 Key Liquidity Pairs

KaspaFinance supports a growing list of popular and ecosystem-native pairs, such as:

* KFC / KAS
* KFC / USDT
* KAS / ETH
* KAS / BTC
* KFC / Partner Tokens

Projects can also launch their own incentivized pools with **single, dual, or triple emission farming**.

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#### 🛠 Coming Soon

* Dynamic Range Pools (recentered automatically)
* Fee Optimization Bots for LPs
* Layered liquidity with external integrations (KaspaBridge, L2 support)

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We will release a beta version shortly
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