How Clipper Works

Sustainable LP Profits + Lower Costs for Traders = Clipper DEX

Clipper facilitates the trade of digital assets between two parties using liquidity to stabilize trades from price swings. Liquidity providers profit from fees collected by the exchange. Traders benefit when the costs to trade are low.

Product guides

To understand how Clipper works it helps to break down the component parts of a DEX.

Clipper is designed to give crypto traders the best overall prices on small swaps of any asset.

A single pool on each chain with the lowest cost for swapping small amounts of the most popular assets.

Deposit into a Farming pools for SAIL and OP to earn additional assets on LP.

Liquidity Program

Sustainable LP Profits

LP returns are calculated as

LP returned

Fees

Impermanent Loss

Liquidity Provided (LP)

Optimized LP returns

LPs in Clipper’s core pool benefit from Clipper’s Daily Rebalancing Portfolio (DRP) mechanism. Using modern portfolio theory Clipper transforms volatility into LP gains, providing beta exposure to generate a stable source of alpha.

Smart Fees

Other AMMs charge protocol fees on every trade, which incentivizes those first-generation DEXs to make frequent, reckless trades regardless of LP profitability. Instead of paying transaction fees to buy and sell, Clipper facilitates swaps at advantageous prices, passing transaction costs (not fees) to traders.

Zero Impermanent Loss

Swap

Lower Costs for Traders

Trade costs are composed of

Slippage

Trading fees

Gas

Minimal Slippage

Larger pools are great for larger trades, where slippage is more likely to be a problem. But for smaller trades, high liquidity isn’t as necessary. Clipper enables low prices for most blue chip traders, at the expense of worse prices for whales and arbitrageurs.

Trading Fees

Clipper offers lower fees on small trades. There are no "fees" or "protocol fees" that a user pays for a swap. Instead, swaps on Clipper are priced so that if a small value (generally 5-20 basis points) is subtracted from the input amount, the market maker'sinvariant is preserved.

Lowest Gas Fees

Clipper has the lowest gas fees because it performs comparative price computation off-chain, then checks the results of that calculation on-chain. This off-chain embed reduces Clipper’s gas usage – both relative to its previous iteration as well as other leading DEXs like Uniswap.

Swap Guide

Honest trades with no arbitrage

What you’re quoted is what you get
All Clipper price quotes are firm, which renders MEV irrelevant and guarantees traders the best prices (and fewer headaches).
More liquidity isn’t always a good thing
Smaller liquidity pools result in more slippage but allow for lower fees to liquidity providers, and vice versa.
Most DEXs think “more” means “better”
Larger pools are great for larger trades, where slippage is more likely to be a problem. But for most trades, high liquidity isn’t as necessary. However, almost every DEX out there is actively trying to attract as much liquidity as possible – which ultimately helps the whales and hurts most blue-chip traders.
Small pools = Lower fees for most trades and higher slippage for very large trades
Clipper is happy to offer low prices for common traders, at the expense of worse prices for whales and arbitrageurs.

What is a Formula Market Maker?

A Formula Market Maker (FMM) uses external market prices from decentralized oracles - as well as token ratios in pools - to balance assets WHERE.

Clipper deploys an innovative Formula Market Maker (FMM) design that captures the benefits of an Automated Market Makers (AMM) and Private Market Makers (PMM), while avoiding the downsides of these alternate designs. Clipper’s architecture circumvents impermanent loss via a pricing function that uses external market prices from decentralized oracles as well as token ratios in pools to balance assets, instead of the constant function CPMMs use.

Daily Rebalancing Portfolio

Clipper’s liquidity pools are designed to track a daily rebalancing portfolio of diversified crypto assets. This minimizes LP risk exposure and transforms market volatility into LP profit. Other DEXs use inflated topline APY figures to attract liquidity providers (LPs). What APY masks is the real rate of return on LP deposits, which can be seen most clearly by measuring Loss Versus Rebalancing (LVR). Clipper ‘s daily rebalancing means it experiences zero LVR.

Correlation

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Last 0 days

Holding ClipperLP

Daily Rebalanced Benchmark

Deposit to a Core Pool

Core Pool	Total pool liquidity	APY (1 week)

Assets

Core assets

The cryptocurrencies that are offered natively through Clipper and make up Clipper’s current liquidity pools.

Polygon Core assets

Liquidity Pool Tokens

ClipperLP

These tokens represent fractionalized shares of Clipper’s core liquidity pool and provide yield to their holders for each Clipper swap made on that network. They can be burnt for the underlying assets in the Clipper pool

Core Pool Guide

Clipper Pools are designed with traders in mind

Clipper’s goal is to offer the best prices on small trades by designing the pools to stay small. Clipper’s liquidity providers are key to making this possible.

As with most DEX liquidity programs, Clipper’s Pool participants stake their funds in a liquidity pool and in return receive a portion of the trading fees accrued on the exchange. That being said, Clipper’s Pool has some notable differences from other DEXs.

Depositing your assets with Clipper

Since liquidity is finite, Clipper prioritizes LPs who are users and community members with a few limitations:

Participants must whitelist in advance.
Only Clipper community members that whitelist their wallet address can deposit liquidity. Whitelist registration is open to anyone.
View whitelist events to register as an LP
Deposits are limited in size.
By limiting the size of each deposit, we can ensure the pool doesn’t exceed the ideal size from only a few big LPs. Whitelisted LPs can see their deposit cap on Clipper by connecting their wallet.
Deposits are locked for a short period.
LP deposits are locked up for a mandatory period to ensure a stable and cost-effective trading experience on Clipper. LPs can view their lockup period by connecting their wallet on Clipper and viewing the pool.

Collecting Riches

You can view Clipper LPs’ historical earnings Clipper’s Data Dashboard, which displays recent fees collected by the pool. These yields are generally exceptionally high for the assets that Clipper trades and are enhanced by limiting LP deposits and Clipper’s novel FMM architecture.

Fees tied to deposit value.
The trading fees you collect as an LP will be added to the overall value of your deposit and can be withdrawn at the same time as your initial stake.
Collect fees from every transaction.
Since Clipper uses one multi-asset pool per network, LPs collect fees from every transaction made on the network, regardless of the asset you originally deposited.
Diversified asset exposure
Unlike some other liquidity programs, the real-time value of your deposit can fluctuate based on the prices of the entire liquidity pool rather than just the original asset you deposited. Depositing to a Clipper pool means that you’ll get blended exposure to both stablecoins and riskier assets.
CLIPPERLP tokens
Each time a liquidity provider contributes to a pool, they receive a certain amount of fungible pool tokens (“CLIPPERLP”). These ERC-20 tokens represent an LP’s fractional ownership of the underlying pool and enable Clipper’s protocols to normalize each LP’s deposits and withdrawal amounts in a way that ensures transparency and fairness for everyone.
To withdraw their liquidity deposits and accrued rewards, Clipper liquidity providers burn their CLIPPERLP pool tokens in exchange for crypto assets in the pool.