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CLAMM Walkthrough
Pre-Readings
Before jumping into the walkthrough, please familiarize yourself with the CLAMM via the following links:
No matter, we continue.
Module
- Connecting your wallet
- Providing liquidity
- Trading options
Connecting your Wallet
First things first, let’s get your wallet connected to the CLAMM dApp.
- Go to the CLAMM website.
Make your way to the alpha testing site here.
It should look something like this.
- Connect wallet
In the top right corner, click the ‘Connect Wallet’ button which will open your wallet options.
Select your wallet of choice and follow the prompts.
- Select market
The market refers to the token pair you would like to provide liquidity for or trade options on.
This can be chosen via the dropdown menu in the top left corner.
Splendid - you are now ready to provide liquidity or trade options.
Providing Liquidity
You may provide either base asset (i.e. token that is not $USDC) or $USDC liquidity to the Dopex CLAMM.
In our example we will be providing liquidity for the ETH/USDC market.
- Switch to ‘Liquidity Provision’ box
By default, the CLAMM user box will be set to ‘Trade’.
Click ‘Liquidity Provision’ to switch to the LP side.
- View Strike Prices
Click the dropdown menu under ‘Strikes’ to open all available strike prices.
Positions that require base asset deposits are denoted with a green arrow while $USDC deposits are denoted with a red arrow.
- Select Strike Price(s)
Click the strikes on the dropdown menu to select it.
You may provide liquidity for multiple strikes in the same transaction.
- Enter deposit amount
Enter the amount of tokens you would like to deposit.
Click ‘Deposit’ and confirm the transactions.
Congratulations, you are now successfully providing CLAMM liquidity!
- Review position and withdraw
If you would like to view your position, go to the bottom of the page and select ‘LP Positions’.
If your liquidity is not currently utilized, you may click ‘Withdraw’ at any time to withdraw your position.
You may also withdraw multiple positions at the same time by selecting the check box and clicking ‘Multi Withdraw’.
Incentivizing Liquidity with Arbitrum STIP Rewards
Thanks to the Arbitrum STIP, we have received an allocation of 600,000 $ARB tokens to reward contributors to our CLAMM v2 liquidity. These incentives are designed to be distributed using a Merkle-based solution developed by Angle Labs, which affords us the flexibility to tailor rewards to our liquidity landscape.
How Merkle Rewards Enhance Our Ecosystem
Merkle provides a strategic method for rewarding concentrated liquidity positions on AMMs such as Uniswap V3. It stands out for its adaptability and efficient reward mechanism catered to LPs.
The core advantage of Merkle is its customization capability for those funding the liquidity—known as incentivizers (us). They allow us to have the latitude of designing our own reward structure, whether by favoring LPs offering more liquidity for a particular asset or by rewarding those with more narrowly defined price ranges.
It also equips us to decide on the inclusion of liquidity positions outside the current price range, optimizing the allocation of incentives based on the market dynamics and strategic objectives.
Our Strategic Approach / Parameters
In alignment with our objectives, Merkle is set to reward liquidity positions managed by the Dopex Uniswap Handler, focusing firstly on positions within price range—aligned with trading fees and liquidity amounts for both tokens in the pair. Additionally, positions falling outside the active price range are also considered for rewards, provided the market price hovers within a ±2.5% margin of their defined range.
For each bought/utilized position, the distributed rewards are proportionally allocated to the position's shareholders, ensuring a fair and balanced incentive distribution that corresponds with the shared risk and contribution of each liquidity provider.
With these parameters, we're pioneering a nuanced approach to reward distribution, aiming to foster a robust and responsive liquidity provision ecosystem within Dopex v2.
Trading Options
Traders may make use of CLAMM liquidity by purchasing options.
As a significant UX improvement from SSOVs, CLAMM options are American-style meaning users may exercise at any time before expiration.
- View available options
The CLAMM page will list all available options based on available liquidity.
By default, the page will be set to ‘Call’ - click the ‘Put’ tab if you would like to trade put options instead.
- Select your strike price(s)
Click the ‘+’ next to your desired strike price to add it to the trade tab (alternatively, use the dropdown menu provided).
Note that you may bundle multiple purchases in a single transaction by simply selecting more strikes.
- Select your time frame
Click the option time frame you would like to open.
We currently offer expiries from 20m to 24hr but intend to expand durations as we continue to iterate.
- Enter the amount of options you would like to purchase
Type in the number of options you would like to purchase at each strike price.
This will automatically output the cost of your premiums.
- Decide on auto-exercise and purchase options
Users may choose to enable the auto-exerciser that will automatically execute options 5 minutes before expiry.
If users do not enable this, they must manually exercise options - even if they are ITM at expiration.
Once this is decided, approve your tokens and click ‘Purchase’.
Congratulations, you have now purchased options via the CLAMM!
- View positions and exercise.
If you would like to view your position, go to the bottom of the page and select ‘Buy Positions’.
A position can be exercised at any time if it is in profit, thus, when a position is ITM it is exercisable while if it is OTM, and cannot be exercised, the button will be greyed out.
Congratulations, you have successfully purchased options (and mayhaps even exercised an ITM position) on our brand spanking new CLAMM!
Closing Comments
Thank you for joining your beloved CEO on a little walkthrough of our brand new CLAMM system.
Do keep in mind that we will continue iterating on this fine product in the coming months!
Onwards and upwards, readers.
Warm regards,
CEO
About Dopex
Dopex is a decentralized options protocol that aims to maximize liquidity, minimize losses for option writers and maximize gains for option buyers — all in a passive manner. Dopex uses option pools to allow anyone to earn a yield passively. Offering value to both option sellers and buyers by ensuring fair and optimized option prices across all strike prices and expiries. This is thanks to our own innovative and state-of-the-art option pricing model that replicates volatility smiles.
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