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‘Continuous Vampire Attack’: The AMM Wars Are Getting Interesting With Integral

“Whenever another exchange tries to beat us with better liquidity, we mirror this liquidity onto ourselves.” Investors have poured $239 million into the platform on launch day.

Mar 29, 2021 at 7:46 p.m. UTC
Updated Sep 14, 2021 at 12:33 p.m. UTC

Uniswap’s latest plans may be public, but that isn’t stopping rivals from building alternatives.

Integral, a new automated market maker (AMM) designed with a baked-in order book, went live early Monday. The protocol’s asset pools have attracted $239 million as of press time as savvy decentralized finance (DeFi) traders race for early token rewards.

The project – built by four Harvard friends and a cast of industry bigwigs – is hoping to syphon liquidity away from decentralized exchanges like Uniswap with its approach to impermanent loss and order book mirroring. Integral’s team members think their design can not only quote better prices but provide fairer returns for liquidity providers (LPs).

“Our primary research question was: ‘What would be the final form of AMMs?’ And the answer: ‘One that eats other exchanges’ liquidity,’” Integral wrote in documents shared with CoinDesk, adding:

“Whenever another exchange tries to beat us with better liquidity, we mirror this liquidity onto ourselves until we regain the world’s best liquidity again. This process can be thought of as a continuous vampire attack until all world liquidity is integrated by us.”

Vampire attacks were made famous by SushiSwap, a clone of Uniswap created by the pseudonymous developer Chef Nomi. During that time, the platform offered token rewards for liquidity moved from Uniswap to SushiSwap. It now seems Integral is taking the idea one step farther by “mirroring” liquidity onto itself to gain adoption.

The founding team of nine, which has requested to remain nameless, is being advised by Polychain Capital founder Olaf Carlson-Wee, Gauntlet founder Tarun Chitra, Compound Finance founder Robert Leshner and Framework Ventures co-founders Michael Anderson and Vance Spencer.

Integral’s scheme

Integral relies on two features to market itself as a competitor to Uniswap, whose latest version typically does $1.25 billion in 24-hour trading volume.

First, Integral uses Uniswap’s own price oracles, but with a five-minute delay. The team thinks the time delay will decrease instances of impermanent loss, where assets contributed to a DEX’s pool bleed out value. That bleeding is the result of how AMMs quote prices – by balancing asset reserves against one another and having arbitrage traders add or remove assets based on price movements off the exchange. 

This rebalancing, in certain situations, can lead to LPs losing value instead of gaining it. It’s thought a time delay will force traders to other platforms while still offering competitive prices.

Second, Integral will mirror snapshots of Binance’s order book onto the AMM to artificially create depth accompanied by Uniswap’s (delayed) prices. By doing so, Integral can experiment with different price curves relative to other AMMs.

Integral expects to be a home for whales, at least for the time being, given the need for liquidity to on-board to the exchange. Four pools will be supported: ETH/DAI, ETH/WBTC, ETH/USDC and ETH/USDT.

To this end, the Integral team raised 11 ETH in a Gitcoin grant to deploy the project on the Ethereum blockchain. 

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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