DAMM Overview

DAMM stands for Dynamic Automated Market Maker is an advanced type of automated market maker (AMM) that adjusts its pricing and liquidity provision strategies dynamically based on real-time market conditions, aiming to optimize capital efficiency, reduce slippage, and minimize losses for liquidity providers compared to traditional AMMs. Unlike static AMMs, which rely on fixed mathematical formulas like the constant product model (e.g., Uniswap’s x*y=k), DAMMs incorporate adaptive mechanisms to align pool prices in volatile market, reducing arbitrage opportunities and improving trading efficiency.

Key Features of Ferra DAMM

• Dynamic Fees: Implements a fixed base fee with an optional dynamic component based on market volatility, currently up to 20% of the base fee, with plans to increase this cap to 90%. This design enhances LP returns during periods of high volatility.

• Anti-Sniper Fee Scheduler: An on-chain fee scheduler that sets swap fees to start high and decrease over time (either linearly or exponentially), serving as an anti-sniper mechanism during token launches. Fee schedules can be based on Unix timestamps or blockchain slot numbers (blocks).

• Concentrated Liquidity: DAMM introduces a partial CLMM model that enhances capital efficiency while preserving the simplicity of the constant-product formula (x * y = k). Pool creators can set a fixed, narrower price range at the time of pool creation, concentrating liquidity within that band for improved execution. Unlike full CLMMs, liquidity providers cannot adjust their price ranges after the pool is deployed, offering a balance between efficiency and protocol simplicity.

• Liquidity Locks: Pool creators can lock liquidity either permanently or with vesting schedules. Permanently locked liquidity is represented by an NFT, which can be tokenized, traded, or integrated into staking and governance programs for fee distribution.

• Single-Sided Liquidity: DAMM supports single-sided liquidity provisioning, enabling token launches to bootstrap pools using only one token. This lowers the barrier to entry and simplifies initial liquidity deployment.

Key takeaways:

DAMM is tailored for LPs seeking higher yields, projects launching tokens, and launchpads aiming for sustainable liquidity. Its anti-sniper fee scheduler and single-sided liquidity make it particularly suited for memecoin and new token launches