Liquidity Pools
Become a liquidity provider on Bluefin’s CLMM to earn fees and rewards:
Concentrated Liquidity: Provide liquidity within specific price ranges for optimized capital efficiency.
Fee Earnings: Earn a share of fees proportional to your share of active liquidity within a price range.
Reward Programs: Participate in liquidity mining programs to earn additional rewards in BLUE and SUI.
To provide liquidity:
Go to the "Concentrated Pools" section and select a pair you want to provide liquidity for.
Set your price range by adjusting minimum and maximum prices.
Enter token amounts to deposit.
Review transaction details (including slippage % and minimum output amount) before confirming in your wallet.
You can view a complete tutorial on providing liquidity here
Feature concepts
Liquidity Pools
Liquidity pools are the backbone of Bluefin's CLMM, where users provide pairs of tokens (e.g., SUI/USDC) to enable decentralized token swaps. By contributing to a pool, users (liquidity providers, or LPs) ensure liquidity is available for swaps, earning transaction fees (proportional to their share of the pool) in the process.
What is Concentrated Liquidity?
Unlike traditional AMMs, Bluefin allows LPs to focus or "concentrate" their liquidity in a specific price range instead of spreading it across all the whole price spectrum (0,∞). This is especially useful for Stablecoin pairs, where the price fluctuates within a narrow range. By concentrating liquidity around the most active prices, LPs maximize their potential fee earnings, as only liquidity within the chosen range is actively used in trades. LPs can open multiple positions on the same Pool based on different price ranges, enabling them to execute more sophisticated trading strategies aligned with different market conditions.
What is Active Liquidity?
Active liquidity refers to liquidity that is currently within the trading price range. If the price of a token pair moves outside the set range of an LP’s position, the liquidity becomes inactive and stops earning fees until the price re-enters that range. This system allows LPs to strategically position their assets in ranges where they believe trades will occur, boosting their fee-earning potential.
Fee Tiers
Bluefin offers multiple fee tiers (0.01%, 0.10%, 0.20%...) that allow the protocol to host multiple pools for the same token pair but with different fees. This flexibility benefits both LPs and traders, as it encourages efficient liquidity distribution. For example, Stablecoin pairs, with low volatility and high volume, may gravitate towards the lowest fee tier, while high-volatility or low-liquidity tokens may move to a higher fee tier to compensate LPs for added risk.
Price Ticks
In Bluefin's CLMM model, prices are divided into discrete intervals, or ticks. Each tick represents a small price change (0.01%, or one basis point - bps) and serves as the boundary for a liquidity position’s range. When the price moves up or down to a new tick, the smart contract activates liquidity in that range. Narrower tick spacing is especially beneficial for pairs needing high price precision, like stablecoins, as it moderates price impact during swaps.
Bluefin's Position NFT
Every concentrated liquidity position is represented as an NFT (non-fungible token), serving as proof of ownership. Each Position NFT stores key details about the liquidity position, like pool address, upper and lower price ticks, and the amount of liquidity. This NFT is needed to claim any fees and rewards generated by the position, and once the position is closed the NFT is burnt.
Active Liquidity-Based Rewards Model
Bluefin uses a active liquidity-based approach for its reward mechanism, where LP rewards are tied to a position’s share of the pool while the liquidity remains active (inside the selected price range). This encourages LPs to keep their liquidity aligned with the most frequently traded price ranges, ensuring that rewards go to actively contributing LPs, making the pool's total value locked (TVL) more efficient.
Protocol Fees
To support Bluefin’s long-term growth and treasury, a small protocol fee is applied to each swap. By default, 20% of the transaction fee from each trade goes to the protocol. This income helps fund ongoing development, maintenance and improvements, ensuring Bluefin’s long-term sustainability.
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