AMM
Product Overview
Flying Tulip’s AMM is the trading engine and price source of the ecosystem. It is the venue where swaps clear, where liquidity earns, and where the system takes its cues for pricing, funding, and risk. Instead of fixing one curve and hoping markets behave, the AMM adapts in real time. In quiet conditions it aims for spreads that feel close to a professional market maker. When volatility arrives, it adds curvature to cushion impact and protect liquidity providers. Alongside the AMM, a CLOB (central limit order book) accepts resting limit orders. Trades can clear entirely on the AMM, entirely through the CLOB, or across both; whichever produces the best executable price for the size at hand.
A market that changes with the weather
Conventional AMMs commit to a single formula, typically constant product. That is robust but can be wasteful in calm markets, and it still leaves LPs exposed when prices trend. The FT AMM blends behaviors instead of choosing one. In stable regimes the curve leans toward constant‑sum so prices barely move for modest flow; the experience is tight spreads and low slippage. As dispersion increases, the AMM tilts toward constant‑product so each marginal unit moves the price more. That extra curvature slows toxic flow and reduces divergence losses for LPs during stress. The transition is not binary. It is driven by smooth regime signals and bounded coefficients, so the curve slides rather than snaps from one extreme to the other.
Knowing when to shift
The AMM watches prices and flow and smooths what it sees with exponential moving averages. Those EMAs dampen over‑reaction to a single print while letting the system respond to genuine regime change. Guardrails cap how far and how fast the curve can migrate during any window, which keeps the experience predictable for both traders and LPs. The result is an engine that responds to conditions without becoming twitchy.
Prices you can actually trade at
A time‑weighted average (TWAP) is useful, but it is blind to depth. The AMM also maintains a reserve‑weighted view (RWAP), which weights each price observation by the liquidity available near the likely path of execution. RWAP answers a practical question, what price can this order size actually clear?, and is more informative for routing and for evaluating realized impact. Downstream systems can also reference depth‑aware measures (such as reserve‑weighted windows) when they size liquidations, set leverage limits, or compute funding for perps.
What it feels like to trade
When you request a swap, the router looks at both books. If there are limit orders resting on the CLOB at a better price, those are swept first. Any remainder is filled against the AMM at the current adaptive curve. Before the transaction is finalized, the router simulates the trade on‑chain to check impact against your slippage tolerance and the pool’s risk guardrails. If a single clip would be too heavy, the order can be split and time‑sliced so it walks through depth more gently. Fees are shown up front and vary with regime; lighter in calm conditions to encourage flow, heavier in turbulence to compensate LPs and slow informed bursts. The receipt tells you how much moved through the CLOB, how much crossed the AMM, and what was paid in fees.
What it feels like to provide liquidity
If you want to earn fees, you can supply assets in a way that matches your attention and risk tolerance. A full‑range position is the simplest: you deposit both sides and the AMM spreads them across the entire price domain. You will always be in range, you will collect a steady share of fees, and you will still experience impermanent loss if the pair trends. If you want more fee density, you can concentrate liquidity into a band you choose. While the market lives inside your band you earn more per unit of capital; if price exits the band, you stop earning until you rebalance.
LP returns come from trade fees and any programmatic incentives displayed in the interface. Fees accrue continuously into the pool’s accounting, and you can add or remove liquidity, or adjust bands, at any time subject to pool policies. All of the usual AMM caveats apply: if the pair drifts, your assets rebalance; if the market runs, concentrated bands need managing. The goal of the adaptive curve is not to eliminate those realities but to make them kinder; tighter prices when it is safe, more protection when it is not.
Fees that make sense
Fixed fees ignore context. The AMM treats fees as a policy instrument. In quiet regimes, the schedule moves toward its lower bound so users are encouraged to route flow here instead of elsewhere. As volatility and toxicity rise, the schedule climbs toward its upper bound so LPs are paid appropriately and flow slows to a sustainable pace. Bounds and sensitivity are public.
Safety before speed
Every swap proposal is simulated against the live curve before state changes. If the simulation shows the trade would breach pool guardrails - too much impact, too shallow reserves, too close to configured limits - the router refuses the transaction. For large orders the system can slice clips over blocks to reduce footprint. The idea is to be fast in all the ordinary moments and conservative in the rare ones that break people.
How the AMM fits the rest of Flying Tulip
The AMM is more than a place to swap. Its prices and depth windows are the foundation for the CLOB, which provides limit‑order precision on top of continuous liquidity. The perps system takes its funding and risk cues from AMM/CLOB prices and depth rather than relying on external oracles. The lending markets lean on AMM depth to perform soft, size‑aware liquidations that minimize market impact and commit LTV ratios based on available size. The insurance primitive uses AMM‑anchored windows for transparent valuations and event checks. And because Flying Tulip is token‑first, a share of the revenue generated here flows into the FT buyback pipeline described in the token overview.
Using it day to day
If you are swapping, you will see a single route preview. Sometimes everything fills on the CLOB, sometimes everything crosses the AMM, often it is a blend. You choose a slippage tolerance; the router enforces it. If you are providing liquidity, you decide whether you want set‑and‑forget coverage, a concentrated band you will tend occasionally. The interface shows the current regime, the fee tier, and the band economics so you can decide whether now is a good moment to lean in, widen out, or step aside.
Understanding the trade‑offs
Adaptive design makes the experience smoother, not risk‑free. Impermanent loss still exists when pairs diverge. Concentrated bands pay more while they are in range and pay nothing when they are not. In stressed markets, spreads widen and fees increase; execution may be sliced to protect the pool. As with any on‑chain system, smart‑contract, integration, and MEV risks apply. The risk page of the documentation explains these in depth and describes the controls - role separation, caps, pausing and circuit breakers, and change management - that sit around the engine.
If you want the short version: the AMM is built to behave like a thoughtful market maker when the sea is calm, and like a cautious one when it is rough. It is the price reference for the rest of Flying Tulip and the place where liquidity earns in a way that respects both sides of a trade.
How to LP (overview)
- Open Provide Liquidity on the pair you want.
- Choose Full‑range, Concentrated (set band), or Leveraged‑style profile.
- Review fee schedule, current regime, and projected fee density.
- Confirm deposit; receive LP position representation (visible in the dashboard).
- Monitor PnL (fees earned minus IL). Adjust bands or exit anytime.
Detailed, step‑by‑step How‑To guides (with screenshots) will cover: adding/removing liquidity, choosing bands, monitoring IL, and harvesting fees.
How to Swap/Trade (overview)
- Open Swap/Trade.
- Select tokens and enter size; set slippage (and advanced options if needed).
- Review the route preview (CLOB/AMM mix, estimated price, dynamic fee).
- Confirm; the router executes, slicing as needed.
- Review the receipt (final price, fee, realized impact).
Risks (summary)
- Impermanent loss (IL). More pronounced with trending divergence; mitigated (not eliminated) by adaptive curvature.
- Out‑of‑range risk. Concentrated liquidity earns zero when price leaves the band until you rebalance.
- Execution risk. In stress, spreads widen and price impact grows; dynamic fees also rise.
- Venue/contract risk. As with all DeFi, smart‑contract, integration, and MEV risks exist.
See Risks, Security & Audits for platform‑wide and capital‑allocation risk frameworks.
FAQs
Is this still an AMM if there’s also a CLOB?
Yes. The AMM provides continuous liquidity; the CLOB provides limit‑order precision. The router can use both for best execution.
Do I have to micromanage ranges?
No. Use Full‑range for low‑maintenance exposure. If you want tighter fee density, choose Concentrated and periodically rebalance.
What makes RWAP better than TWAP for large orders?
TWAP averages over time; RWAP weights by available reserves near the path, so it approximates the price you’ll actually get for size.
Can AMM prices be manipulated to affect Perps or Lend?
Pre‑trade guardrails, depth‑aware metrics (RWAP/TWAR), dynamic fees, and slicing are designed to resist short‑burst attacks. No system is risk‑free; see the risk page for details.
Related pages
- FT Token - Product Overview: token‑first flows and buyback pipeline
- ftUSD - Product Overview: how settlement currency and staking (sftUSD) work
- Perps - Product Overview: how pricing/funding leverage AMM + CLOB metrics
- Lend - Product Overview: soft liquidations and depth‑aware risk controls
- Risks, Security & Audits: general DeFi and AMM‑specific risks
- How‑Tos: Add/Remove Liquidity, Choose Ranges, Advanced Swap Routing (coming soon)