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2023 Review

Jan 3, 2024

We started drafting this post on December 20th, 2023. A year ago, on the very same day, we finished writing the annual review of 2022, and the last section reads like this:

After launching on Arbitrum, the development team got to work on a new product, the Integral atomic relayer. The relayer allows traders on DEX aggregators to take advantage of SIZE liquidity to do instant trades at the previous 30-minute TWAP price. We have already deployed the relayer on mainnet and started integration with some aggregators. Look for much more to come on this in the year ahead.

“Much more” could be a Freudian slip (usually we say “look for more”), but the truth is, the relayer has exceeded anyone’s expectation by far. Exactly 12 months after the relayer was released, Integral is the 9th most utilized decentralized exchange on Ethereum mainnet (source: DefiLlama), with an accumulated trading volume of $1.7bn. Things also look promising for our Arbitrum version, which we believe will replicate the success of Ethereum’s.

It’s been a really long year, and we’ve got lots of reflections and gratitude to share. But before getting to that, let’s dive into the 5 most important milestones we had this year.

Milestones

Integral Relayer: Our Major Leap

The Integral Relayer stands as our crowning achievement this year. This innovative smart contract has processed ~$1.2 billion in volume, showcasing exceptional quote competitiveness and capital utilization.

Not just limited to aggregators like 1inch, OpenOcean, Odos, OKX, and UniDex, the relayer has also been tapped by top CoWSwap solvers like Barter and OTEX, and even attracted interest from indie developers who might be building their own MEV bots😈.

A year of growth for Integral, fueled by relayer, gas optimizations, and new integrations.

LP fee distribution

In the last quarter, we embarked on a pivotal enhancement for Integral by rolling out a new LP system. This system fundamentally changes the way our LPs benefit, enabling them to directly earn 100% (tweakable) of the trading fees from Integral pools.

Apart from this, being a LP at Integral comes with other significant advantages, including mean-0 impermanent loss (IL)and superior capital efficiency. It's worth noting that Integral has now become the most capital-efficient Automated Market Maker (AMM) on the Ethereum network.

Integral is the #1 AMM in terms of capital efficiency.

What's more exciting is the added capability of this system to distribute arbitrary ERC20 tokens as farming rewards. This feature positions Integral as an ideal platform for projects seeking to bootstrap their on-chain liquidity and enhance their quote competitiveness.

Gas optimization

A major upgrade across all contracts on both Arbitrum and mainnet has reduced gas usage per atomic swap significantly. This optimization further enhances our competitiveness, winning flows from aggregators and solvers for Integral LPs.

https://twitter.com/IntegralHQ/status/1689890307309977600?s=20

Arbitrum ramp-up

Our focus on Layer 2 led to the deployment of key features on Arbitrum, including the atomic relayer and the new LP system. Currently, the Arbitrum version is processing ~$0.75mil volume with less than $0.2mil TVL everyday. With these advancements, we foresee Integral becoming a crucial liquidity backbone on Arbitrum.

Towards a pro suite for trading

Our vision to transform Integral into the "Uniswap for Pros" is taking shape. The addition of atomic swap and limit order(testnet) to our existing features like the price comparator is a testament to our commitment to versatility in Ethereum trading.

Reflections and look ahead

Reflecting on the past year, we've faced challenging market conditions. In Q3 2023, Ethereum's daily volume fell to about one-third of its Q1 volume, posing a significant challenge across the crypto industry. This underscores the longer, more complex journey to achieve product-market fit. At Integral, our focus remains on developing a sustainable product for on-chain trading, serving both traders and liquidity providers.

In the first half of our journey, Integral achieved our goals. In 2023, we enhanced the trader experience and gained a top-tier position among DEX platforms. Entering 2024, our priority is sustainability, meaning we'll leverage our composability and deepen our industry roots. This includes collaborations with more token projects, Layer 2 ecosystems, and aggregators.

Effectively serving LPs remains a crucial yet often overlooked aspect of DeFi. Therefore, in the second half of our journey, we aim to assist token projects in improving their on-chain liquidity.

In Q4, we introduced a new LP system, enabling LPs to earn trading fees and token incentives. This new rewards system, coupled with our capital-efficient design, seeks to create a positive cycle involving LPs, token projects, aggregators, and Integral:

  • LPs: higher yield → more liquidity.

  • Token projects: more liquidity → more competitive quotes.

  • Integral: more competitive quotes → more flows from aggregators, solvers, and traders.

  • Aggregators, solvers, and traders: more usage of Integral’s liquidity pool → higher yield for LPs

Integral amplifies on-chain liquidity, aligning LP with DeFi's sustainability.

While it's clear how LPs and Integral benefit as a DEX from these initiatives, it's important to emphasize the advantage for token projects using Integral to increase their tokens’ on-chain liquidity. Despite Uniswap's introduction of concentrated liquidity improving capital efficiency and pricing, it remains underutilized, often due to the complexity for LPs in managing liquidity actively. Integral simplifies incentivizing concentrated liquidity, offering token projects an easier way to strengthen their on-chain presence, offering a streamlined solution for token projects to deepen their on-chain liquidity.

With the building blocks accumulated over the past few years, Integral is poised to offer a hassle-free management solution for concentrated liquidity. Token projects need only create a pool on Integral, add token rewards, and reap the benefits of concentrated liquidity. This approach ensures not just liquidity, but its optimal placement in active trading ranges, leading to competitive quotes and reduced on-chain slippage.

As stated at the beginning, the on-chain spot market will continue to present challenges in 2024. The only way a DEX can address these issues is by building a sustainable product—providing traders with less slippage, LPs with capital efficiency and high yield, projects with ways to deepen their on-chain liquidity. As Integral’s product offerings meet this standard, a DAO launch and tokenomics overhaul will naturally follow.

Thank-you notes

  • To 1inch: for being the first aggregator to integrate us

  • To Odos, OpenOcean, Barter, OKX, OTEX, UniDex: for channeling lots of volume to us

  • To DefiLlama: for creating up-to-date leaderboard of DEX volume that makes the journey so much fun

  • To Uniswap: for being the platform that provides us a robust price oracle, and we are super excited to work with you guys on v4

  • To all friends who are currently integrating us: let us know if you need any help!

  • To our traders and liquidity providers: for using the product extensively and constantly provide feedback.