SushiSwap Deploys Concentrated Liquidity Pools on 13 Networks
SushiSwap has launched its v3 concentrated liquidity pools on 13 different networks, marking the largest deployment of its kind to date. The move is designed to improve capital efficiency for traders across the DeFi ecosystem. This expansion highlights a cross-chain trend in which major DeFi protocols are broadening their infrastructure to serve a multi-chain environment.
- The v3 model introduces "concentrated liquidity," which allows liquidity providers (LPs) to allocate capital within specific price ranges instead of spreading it across an entire price curve from zero to infinity. This method can significantly increase capital efficiency, leading to lower slippage for traders and potentially higher fee-based yields for LPs. - This model was pioneered by Uniswap v3; SushiSwap's adoption came after the expiration of Uniswap's Business Source License, which initially protected the code from being forked. - The initial deployment includes chains like Ethereum, Arbitrum, Polygon, Avalanche, and BNB Chain, with a second phase planned to expand support to over 30 networks in total. Sushi also plans to introduce a rewards program, issuing extra SUSHI tokens to the most efficient LPs on key networks like Ethereum and Arbitrum. - While more capital-efficient, concentrated liquidity positions require more active management. If the asset's price moves outside the LP's designated range, their position becomes inactive, stops earning fees, and is more exposed to impermanent loss. - This cross-chain expansion strategy is part of a broader DeFi trend where protocols aim to capture liquidity and users across multiple ecosystems rather than being confined to a single blockchain. - The trend of concentrated liquidity is already established on Solana. Protocols like Orca, with its Concentrated Liquidity Automated Market Maker (CLMM) called Whirlpools, as well as Lifinity and GooseFX, offer similar capital-efficient trading and liquidity provision. - Automated liquidity management solutions have also emerged on Solana to address the complexity of managing concentrated liquidity positions. Kamino Finance, for example, offers vaults that automate range setting and rebalancing for LPs on Solana's CLMM DEXs.
