Hercules DEX Overview
Hercules DEX, built on the Metis Andromeda network, offers a specialized platform for decentralized trading and liquidity provision. Its structure revolves around capital-efficient, non-custodial liquidity pools that operate using advanced automated market maker (AMM) technologies. Hercules provides support for both volatile and stable asset pairs with dynamic fee structures, ensuring optimized trading across various market conditions. As a fork of the Camelot DEX on Arbitrum, Hercules integrates enhanced AMM mechanics, including concentrated liquidity, spNFTs, and customizable fee settings to cater to different market needs.
AMM Features and Liquidity Management
AMM V3
Hercules operates an AMM V3 protocol based on Algebra’s concentrated liquidity model. Users can allocate liquidity within specific price ranges, resulting in more efficient use of capital and increased liquidity depth for popular trading ranges. Two operational modes are offered:
- Manual Mode: Liquidity providers (LPs) select a price range manually using presets such as Full, Wide, Common, or Narrow. Each range optimizes liquidity distribution based on asset volatility.
- Auto Mode: Partners such as Gamma and Steer assist in automatically managing price ranges. This mode helps users maximize yield while reducing the need for continuous monitoring of market conditions.
The platform also supports dynamic volatility-based fees that adjust according to market conditions. This feature enhances fee generation, with higher fees applied during high volatility and reduced fees during low trading periods, providing a more balanced trading experience.
Plugins and Yield Generation
Hercules enhances liquidity positions with plugins that provide additional layers of incentivization. Key plugins include:
- Dividends Plugin: Allocates trading fees to users holding xTORCH.
- Yield Booster Plugin: Increases staking yields, with potential returns boosted up to 100%.
- Launchpad Plugin: Grants xTORCH holders early access to token launches on the platform.
These plugins introduce a composable infrastructure that allows builders to integrate custom incentives into liquidity pools.
Dual-Token System: TORCH and xTORCH
TORCH Token
TORCH is the primary liquid asset of the platform, with a capped supply of 10 million tokens distributed over three years. TORCH serves as the primary currency for liquidity incentives, trading rewards, and emissions. Liquidity providers receive a portion of their rewards in TORCH, which circulates within the DEX to promote active liquidity management and trading activity.
xTORCH Token
xTORCH functions as the escrowed version of TORCH, used within the ecosystem to unlock enhanced rewards and privileges. xTORCH cannot be transferred but can be staked in various plugins to generate additional returns. Users convert TORCH to xTORCH, which locks value into the system and grants access to higher yields and dividends. A 0.5% fee applies when unstaking xTORCH from the plugins.
The combination of TORCH and xTORCH allows Hercules to balance liquidity availability with long-term incentives. This dual-token design aims to reduce inflationary pressure and maintain sustainable growth.
