There have been many speculations on what our well-kept 7/20 secret announcement was going to be, and we’re happy to say that most of you were close, but no cigar! We are glad that we were able to surprise most of you with this exciting news, and are more than excited to finally give you this exclusive first look into The Sushi Next Generation AMM:
Trident was first developed with the core focus of capital efficiency and cryptocurrency volatility protection using powerful, yet intuitive and easy-to-use, tools to provide DeFi with its new protocol standard. Our goal was to reinvent the wheel, without sacrificing user familiarity with Sushi’s newly revamped and consolidated interface.
Being a community-centric platform, we are given priceless feedback from our users on a daily basis. With that information, we strive to constantly improve the Sushi user’s DeFi experience, but also knew that there were certain pain points for DeFi users in general that made simple transactions either confusing or expensive, or both, resulting in costly, irreversible mistakes.
With this in mind, we knew that we couldn’t be comfortable with minimal updates to appease simple design or site flow inconveniences, especially due to the recent rehaul, asking the Sushi community to relearn a new Sushi site again would be too big of an ask. Big changes were needed, fundamental changes, but, more importantly, we needed you, our community members, to barely notice them.
Trident’s beginnings originate with inspirations from the Sushi team’s original discussions with Yearn Finance’s Andre Cronje about Deriswap and from the Mirin, Sushi AMM V2 proposal written by Sushi Core Developer, LevX.
The focus of Deriswap was capital efficiency by removing liquidity silos between various financial tools such as:
i. Trading protocols (or swap-focused platforms, like Sushi)
ii. Lending protocols (or margin trading-focused platforms, like Aave)
iii. Option protocols (like Deribit)
You will see throughout this Trident explanation, the focus we have placed on our next generation AMM’s capital efficiency and see how we have created a solution to seamlessly integrate and intertwine Sushi’s many products to give you a DeFi experience as never imagined.
Part of this newly envisioned DeFi horizon was paved by the Mirin proposal. Community members rejoice! The highly anticipated Franchised Pools are in the works, along with LevX’s proposed expansion of liquidity provider (LP) curve options.
Trident is a new AMM from Sushi currently in development and not a fork.
Who needs a fork when you have a trident?
Trident — First Prong
BentoBox’s First Native AMM Elevates Trident To New Heights
The term “Next Generation AMM” is very justified to describe Trident, thanks to the power of Sushi’s token vault, BentoBox. The BentoBox can also be considered as an architectural platform that allows developers to build complex, capital-efficient applications on top of it, such as Trident, for example.
If you have given BentoBox a try, which we highly recommend doing so here with the Kashi platform, you will know that BentoBox allows for single token approval for usage across all its apps, saving you time and gas money! Not only that, BentoBox applies something called “strategies” to the assets deposited within it, earning its users passive yields at no fee cost.
To better illustrate, take the BentoBox Sushi Strategy for example. If you were to take your $SUSHI tokens from your wallet and deposit them into your BentoBox token vault, without doing anything else and without paying any gas fees other than the send fee from your wallet, you will start earning Sushi.com platform fees, accrued from staking $SUSHI in the SushiBar. Even if your assets are sitting in your BentoBox balance idly, you will automatically be earning yields from strategies that are applied to the vault.
The Sushi Strategy is one of many strategies that can be applied at once to BentoBox. The potential given to users by this powerful vault and the limitless possibilities of strategy design was the reason for Trident to be built upon it and why we coin this new AMM as the most capital efficient in DeFi in existence.
Trident — Second Prong
An Expansion of Pool Type Options
As of now, many decentralized exchanges rely on the constant product pool formula as their infrastructure. Trident is intended to be, at minimum, a superset of all AMM pool designs, by adding multiple pool types to provide relief for many of the pain points experienced due to the siloed liquidity problem and to protect users from price impacts and other risks that are faced by cryptocurrency holders.
Due to the nature of DeFi, technology, ideas and possibilities go from ideation to implementation at lightning-fast speeds and to ensure that the Sushi protocol is prepared for unforeseen updates to the DeFi horizon, Trident allows for simple integration of added pool types. This integration is made possible by standardizing the pool interface which allows adding new pool designs as long as they conform to the interface; Told you that without this explanation you would barely notice it!
Initially, Trident has been developed with four pool types, the first should look a little familiar to say the least.
Constant Product Pool
To refresh your memory, constant product pools are made up of two assets at an equal monetary value of each. To better explain, if you wanted to add $200 of liquidity to the current Sushi AMM’s SUSHI-WETH pair, you would have to add $100 of SUSHI tokens and $100 of WETH tokens to complete your transaction. If you only have $80 worth of SUSHI tokens, than you can only match it with $80 worth of WETH to make a $160 addition of liquidity to the AMM. Luckily, thanks to the zap in/zap out feature, these limitations are no more! You can add any amount of assets and we’ll swap the for you behind the scenes to make everything evened out.
In this pool type, swaps function automatically, hence the term Automated Market Maker (AMM), thanks to the formula: x*y=k, also known as the, constant product formula.
Hybrid pools were included to allow users to swap like-kind assets at reduced price impacts. In hybrid pools, users can include up to 32 assets in just one pool! Based on a stableswap curve, this allows for similar assets to be traded amongst one another in a single pool, with less interference from other market factors or obviously dissimilar tokens.
Concentrated Liquidity Pool
One of the more exciting pool types to splash onto Trident is the concentrated liquidity pool, which asks users to specify the token asset’s price range to add liquidity to.
Traditionally, when you are a liquidity provider on SushiSwap, you receive platform transaction fees from swaps within your LP pool at a rate of your share of the entire pool itself, regardless of a token’s price. As DeFi protocols, such as Sushi, increase in popularity, your share of the pool can get smaller and smaller, until it’s almost miniscule. This pool style aims to tackle that lack of LP incentivization due to unattractive pool shares.
As shown in the picture to the left, liquidity providers will be able to select the token price range in which they wish to receive platform fees. This is in the hopes that the amount of the pool that you need to share with fellow providers will spread more evenly between several ranges, offering you a bigger piece of the pie in your selected range, which means in higher fee accumulation.
For concentrated liquidity pools the ultimate benefit is that it will allow liquidity providers to more narrowly scope their liquidity provisioning to maximize share of revenue they receive from platform swap fees across Sushi.com.
Weighted pools will be similar to constant product pools with the exception that the pools allow different weight types, breaking the limitation of requiring a 1:1 value match between both assets in a pair, as is the case with constant product pools. Even better, weighted pools can support up to 8 tokens at the same time.
Again, weighted pools allow liquidity providers to specify the percentage of each asset in the pair. Being no longer restricted to 50% — 50%, users will have the ability to give 20% of the pool in one asset and 80% of the other, just as long as together they total 100%.
To use the illustration above, let’s say you had $80 worth of SUSHI tokens and $100 worth of WETH. Together you can add $180 worth of liquidity, with your $80 of SUSHI tokens making up 44.44% of the pair and your $100 in WETH comprising of the remaining 55.56%.
A constant product pool has 50/50 weights of Token X to Token Y. Weighted pools will allow an arbitrary weight of Token X to Token Y. The advantage of this pool type is that it shifts the price impacts by the token weights.
A variety of pool types gives users the power to choose pools that best suit their risk profile and a more refined method of crypto money management.
Trident — Third Prong
Tines: Routing Engine
Tines is our new routing engine designed for the front end to make the Sushi interface more intuitive. Tines is an efficient multihop, multiroute swap router. Multihop deals with searching multiple pools to perform a and multiroute deals with searching multiple paths a token takes to exchange into another. Tines will query our many pool types, and consider factors such as gas costs, price impacts, and graph topology to generate the best price solution.
Now that Sushi will have multiple pools with Trident, the multihop can search for through more possibilities for low price opportunities, maximizing the ability of the SushiSwap swap function.
You might remember that when you perform a swap on Sushi.com, the route of your swap will display as part of the details of the transaction (SUSHI → WETH → AXS, eg). There are no Sushi — Axie Infinity pools on Sushi, but there are AXS — WETH pairs and SUSHI — WETH pairs, so switching the from token to the common denominator token pair of the to token when swapping is what we call a route. When performing a swap in the past, we were limited to these route styles, but with the Tines multiroute ability, we can perform trades horizontally to minimize price impacts (slippage).
Different asset types perform better in different pool types. For instance, like-kind assets such as wBTC and renBTC tend to perform better in hybrid pools. Tines will allow routing more effectively to make multiple pools act as a unified pool resulting in drastically reduced price impacts.
At Sushi, we firmly believe in standardization across DeFi will propel protocols across the board to mass adoption and, in line with that ethos, until and beyond that standard is set, we will continue to have an open source ecosystem. Our new set of Next Generation AMM: Trident contracts are GPL3, and we view it as a matter of principle to release all software developed by the Sushi team to be under GPL3, or other permissive OSS licenses.
Post Launch Roadmap
Trident will be launching within the next couple of weeks, but we have more exciting news for the new AMM in the pipeline. Coming to its subsequent version are the follow upgrades:
One of Sushi’s more ambitious features are its plan for franchised pools. As you may recall, this AMM function hopes to drive liquidity by incentivizing LPs who keep their assets in centralized exchanges. Following the launch of Trident, the organization will begin working on these awaited franchise pools, which promise to unite the CEX and DEX for a mutually beneficial cause. We aim to make this match while meeting the needs of the compliance of centralized exchanges. These pools will, thus, be differentiated from the main Trident AMM and will allow institutions to whitelist liquidity providers and swappers.
Storage Proof TWAP
The Trident implementation will allow for the presentation of a storage proof to give two simultaneous snapshots of the cumulative price. To do this, the user using the TWAP price will present a merkle proof where the block root is less than 256 blocks behind the canonical head. On chain, the contracts will confirm the validity of the storage proof and value to allow an instant TWAP snapshot. We have repurposed another implementation for Kashi and is currently deployed on Polygon, as well as working on a reduced gas consumption version for a deployment on Ethereum. The benefit of TWAP is that it’s a fully decentralized, trustless price oracle for all assets.
At the SushiSwap presentation held in Paris, France at 2PM CEST, Sushi CTO, Joseph Delong, announced to attendees the upcoming Sushi Trident AMM. As a special token of remembrance for those who heard it first, each in attendance was given a special Sushi card that will grant them access to the NFT version of the “Bad Trip” NFT posted towards the beginning of this article.
For those in our community who were unable to be present for this special event, we have minted 20 tokenized versions of this NFT that make up a 1/20 fraction of its entirety. These limited edition fractionalized pieces will be available for bidding on MISO starting from July 20th, 2021 at 4PM UTC, by visiting miso.sushi.com.
Sushi is building a comprehensive DeFi ecosystem with AMM, leverage & margin trading platform, token launchpad and NFT artist platform. Follow our socials to keep up with our product launches and find out more on how you can make the most of your cryptocurrency assets with Sushi’s secure and powerful DeFi tools!
Introducing, The Sushi Next Generation AMM: Trident was originally published in Sushi on Medium, where people are continuing the conversation by highlighting and responding to this story.