UniswapV3 - Concentrated Liquidity Pools on Cardano

[Proposal setup] Proposal title

Please provide your proposal title

UniswapV3 - Concentrated Liquidity Pools on Cardano

[Proposal Summary] Budget Information

Enter the amount of funding you are requesting in ADA

200000

[Proposal Summary] Time

Please specify how many months you expect your project to last

9

[Proposal Summary] Translation Information

Please indicate if your proposal has been auto-translated

No

Original Language

en

[Proposal Summary] Problem Statement

What is the problem you want to solve?

Cardano DEXes still use capital-inefficient UniswapV2 AMMs, limiting yields for liquidity providers, increasing slippage for traders, and holding back DeFi competitiveness.

[Proposal Summary] Supporting Documentation

Supporting links

• https://blog.uniswap.org/uniswap-v3

[Proposal Summary] Project Dependencies

Does your project have any dependencies on other organizations, technical or otherwise?

No

Describe any dependencies or write 'No dependencies'

No dependencies

[Proposal Summary] Project Open Source

Will your project's outputs be fully open source?

Yes

Please provide details on the intellectual property (IP) status of your project outputs, including whether they will be released as open source or retained under another licence.

The source code will be released under the MIT license.

[Theme Selection] Theme

Please choose the most relevant theme and tag related to the outcomes of your proposal

DEX

[Campaign Category] Category Questions

Describe what makes your idea innovative compared to what has been previously launched in the market (whether by you or others).

To date, all Cardano DEXes use UniswapV2-based AMMs, which spread liquidity evenly along the constant product curve and are inherently capital-inefficient. No concentrated liquidity AMM exists on Cardano.

Existing platforms such as Minswap, WingRiders, and SundaeSwap implement obsolete UniswapV2-style constant-product AMMs. Genius Yield is often referenced as having concentrated liquidity, but this is only possible because it operates as an order-book DEX rather than an AMM: bids and asks are matched like on centralized exchanges, and once a trade executes, liquidity leaves the protocol. In contrast, AMMs perform trades against pooled liquidity that remains in the system. Other solutions, such as Splash with weighted pools, still follow a UniswapV2-like model and do not offer the granular price-range liquidity provisioning introduced by UniswapV3.

Our project introduces UniswapV3-style smart contracts - adapted for the eUTxO model, that allow LPs to allocate liquidity within custom price ranges, achieving much higher capital efficiency.

Describe what your prototype or MVP will demonstrate, and where it can be accessed.

Our MVP will demonstrate that a concentrated liquidity AMMs can operate effectively within the eUTxO model, validating that Cardano is capable of supporting advanced DEX architectures beyond the traditional UniswapV2-style constant-product pools.

The smart contract code, together with a backend and frontend, will be fully open-sourced and accessible through the project’s GitHub repository at https://github.com/CardanoProphet/uniswap-v3-cardano

In addition to the repository, the MVP will be deployed on the Cardano testnet. This live environment will allow users, developers, and ecosystem partners to interact with the prototype, provide feedback, and observe how concentrated liquidity behaves under real-world conditions. Insights gathered from this testnet deployment will inform optimizations and improvements.

Describe realistic measures of success, ideally with on-chain metrics.

Since this project will deliver a working prototype on testnet, the most realistic and meaningful measures of success are interaction-based metrics. We expect tangible engagement from the community, including consistent usage of the contract functions. A successful outcome would be observed through hundreds of unique testnet users executing liquidity provisioning, removal, and swap operations, resulting in thousands of on-chain testnet transactions. These metrics would demonstrate that the protocol is both usable and attractive to real users, not just theoretically sound.

Beyond pure usage numbers, interest or experimentation from an established Cardano DEX - whether through evaluating the codebase, contributing feedback, or engaging in early technical discussions - would be an ideal indicator of long-term ecosystem impact. While such collaboration cannot be guaranteed or directly controlled, it would validate that concentrated-liquidity AMMs are seen as strategically valuable for Cardano's DeFi future.

[Your Project and Solution] Solution

Please describe your proposed solution and how it addresses the problem

Currently, Cardano DEXes utilize UniswapV2-like AMM smart contracts, that evenly distribute the provided liquidity along the constant product "curve". This is very capital inefficient.

Let's take for example a regular constant product AMM liquidity pool. For the constant product, the curve will look like this:

In this case, the liquidity is spread evenly along the entire x*y=k curve, meaning capital is allocated across all possible prices between zero and infinity. In practice, most of this liquidity is never touched.

As a result, liquidity providers (LPs) only earn fees on a small fraction of their deposited funds, while still being exposed to impermanent loss - often leaving them with negative returns.

UniswapV3 introduced the idea of concentrated liquidity, where LPs define the specific price ranges in which they want to deploy liquidity. This creates customized liquidity curves that reflect market activity and individual preferences. All of these positions are combined into a single pool, and trading fees are distributed pro-rata to LPs who have liquidity in the active range. This design enables LPs to achieve the same market depth as V2 with a fraction of the capital, greatly improving efficiency and returns.

Concentrated liquidity allows LPs to match V2's depth within chosen price ranges while committing only a fraction of the capital.

When the market price moves outside of a chosen range, the LP's position is no longer active and stops earning fees. At that point, their holdings consist entirely of the less valuable asset until either the price re-enters their range or they adjust their position to new market conditions.

Given such AMM DEX does not exist on Cardano blockchain, we propose creating open-source UniswapV3-like smart contracts bringing concentrated liquidity.

The primary reason a UniswapV3-style DEX has not yet been deployed on Cardano is the complexity involved in adapting concentrated liquidity to the eUTxO model. Concentrated-liquidity AMMs require careful state management, efficient storage of liquidity ranges, and precise tick accounting - all of which demand highly optimized scripts. With recent advancements in Cardano tooling, compiler optimizations, and improved on-chain data design patterns, this class of AMM can now be designed to operate within practical constraints. Our goal is to design and open-source a concentrated-liquidity AMM on Cardano, enabling DEX teams and the wider ecosystem to deploy capital-efficient pools. By providing a well-researched, optimized smart contract foundation, we aim to unlock UniswapV3-level liquidity efficiency on Cardano.

Given the UniswapV3-like pools are existing in the Address model blockchains and not the UTxO ones, the first part of the project will be research. In-depth analysis of the UniswapV3 code and writing documentation detailing the possible Cardano implementation recreating this logic in the eUTxO realm.

Currently, we have multiple ideas, for example one being chaining multiple "constant sum"-like liquidity pools per one price tick using an on-chain linked list, similar to the trusted existing implementation open-sourced by AnastasiaLabs: https://github.com/Anastasia-Labs/aiken-linked-list This approach may however be inefficient when having many small price ticks and big trades.

The other possible approach may be one pool instance per token pair, with the data stored inside a data structure like a merkle tree or similar, with the tree contents being publicly readable off-chain. However, as mentioned, for the final implementation choice an in-depth research will be carried out and properly documented.

Following the research phase, we will proceed to smart contract development in Plutarch or Plutus (using builtins) to maximize performance and minimize script size.

We will then create comprehensive test vectors and a full test suite to verify the implementation. The test cases will be made public, so anyone can exactly replicate their execution.

The main deliverables will be open-source smart contracts for concentrated liquidity AMMs on Cardano. This proposal will include also a simple dApp backend or frontend, as the goal is to provide foundational infrastructure that existing Cardano DEXs (e.g., Minswap, SundaeSwap, WingRiders, etc.) can pick up, deploy, or extend for their own platforms. We will deploy on testnet in order to collect feedback.

Additionally, as part of our community engagement and feedback plan we will publish multiple educational posts explaining the advantages and inner workings of concentrated liquidity AMMs. To further promote awareness and encourage participation, our testnet application will feature an optional NFT memorabilia minting mechanism, allowing users to commemorate their involvement in the project. Lastly, we will be actively collecting and incorporating user feedback to our testnet deployment.

We would also like to emphasize that no AMM DEX on Cardano currently provides true concentrated liquidity. Existing platforms such as Minswap, WingRiders, and SundaeSwap implement UniswapV2-style constant-product AMMs. Genius Yield is often referenced as having concentrated liquidity, but this is only possible because it operates as an order-book DEX rather than an AMM: bids and asks are matched like on centralized exchanges, and once a trade executes, liquidity leaves the protocol. In contrast, AMMs perform trades against pooled liquidity that remains in the system. Other solutions, such as Splash with weighted pools, still follow a UniswapV2-like model and do not offer the granular price-range liquidity provisioning introduced by UniswapV3.

We would also like to highlight that this proposal directly addresses several pressing challenges in Cardano DeFi. A concentrated-liquidity AMM significantly reduces slippage by allocating liquidity around relevant price ranges, rather than spreading it uniformly across all possible prices. Recent market events, such as the DJED trading "incident" where users dumped the asset on shallow-liquidity DEXes instead of redeeming it at par value, illustrate the core issue: inefficient liquidity distribution amplifies volatility and creates artificial price dislocations. With concentrated liquidity, depth can be focused near the $1 peg, which dramatically improves trade execution and resilience. Additionally, the ecosystem continues to face insufficient stablecoin depth and large price impact on trades. Proposals to inject tens of millions of ADA into liquidity pools may temporarily alleviate symptoms, but they do not address the underlying inefficiency. The sustainable solution is not simply "more liquidity", but better utilization of liquidity - precisely what UniswapV3-style AMMs achieve by enabling capital to be deployed where it is actually needed.

[Your Project and Solution] Impact

Please define the positive impact your project will have on the wider Cardano community

This project will bring concentrated liquidity pools to the Cardano ecosystem for the first time, unlocking a level of capital efficiency that current AMM designs cannot match. The benefits to the wider community include:

• Improving stablecoin resilience and capital efficiency: Concentrated liquidity pools solve, at least partially, the systemic inefficiency that prompts proposals to inject tens of millions of ADA into stablecoin liquidity. Instead of requiring increasingly large liquidity budgets, UniswapV3-style AMMs deploy liquidity where it is actually needed, achieving deeper markets without escalating capital requirements.
• Reducing artificial price dislocations such as the DJED "incident": The dramatic DJED "depegging" episode was not caused by the protocol failing, but by shallow, inefficient liquidity on V2-style DEXes. Concentrated liquidity allows depth to be focused around critical price points (such as $1), making similar events significantly less likely and protecting both traders and the overall user experience.
• Higher APY for Liquidity Providers: By allowing LPs to focus their capital within specific price ranges, their liquidity will be utilized more effectively, enabling them to earn higher fees with less capital at risk. This improves profitability and makes liquidity provision on Cardano a more attractive investment.
• Lower Slippage for Traders: Concentrated liquidity results in deeper liquidity exactly where it is needed, which significantly reduces price impact on trades. This makes trading on Cardano DEXs more competitive with centralized exchanges, improving the user experience and encouraging higher trading volumes.
• Attract More TVL to Cardano: With higher yields and better trading conditions, Cardano DEXes become more appealing to both retail and institutional liquidity providers. This increased total value locked (TVL) not only strengthens the DeFi ecosystem but also has a network effect, attracting more projects, traders, and developers to build on Cardano.
• Strengthen Cardano's DeFi Competitiveness: By delivering the open-source smart contracts for concentrated liquidity, existing DEX platforms like Minswap, SundaeSwap, WingRiders, and others can quickly integrate advanced liquidity features. This leapfrogs Cardano DEX capabilities to match or exceed those on Ethereum and other blockchains.

In short, this project will enable Cardano DeFi to offer better yields, better trading conditions, and a more compelling value proposition to global liquidity providers and traders, strengthening the network's position in the competitive blockchain landscape.

[Your Project and Solution] Capabilities & Feasibility

What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?

• Adam Valach: Smart Contract Developer at Anastasia Labs with prior experience at WingRiders (V1, V2, Stableswap, Launchpad), Wincent (High-Frequency Trading) and has also worked on projects with teams from IOHK, Shielded and Midnight Foundation (Glacier Drop). Adam brings deep expertise in Plutus and Plutarch, alongside strong web development skills, and began building on Cardano from the first day smart contracts were available on testnets.

LinkedIn: https://www.linkedin.com/in/adam-valach-033ab7217/

• Mark Petruska: Formal Methods Engineer at Input Output (IOHK), and previously a Team-lead and Auditor at Anastasia Labs, with experience on a number of other Cardano protocols and Catalyst proposals.

LinkedIn: https://www.linkedin.com/in/mark-petruska-1a611527/

In terms of feasibility, both of us have prior experience working on the WingRiders DEX, giving us a strong understanding of AMM DEX architecture, code logic, and supporting infrastructure. This background gives us confidence in our ability to deliver the proposed solution effectively and contribute to the next generation of Cardano DeFi.

[Milestones] Project Milestones

Milestone Title

Architecture and Technical Documentation

Milestone Outputs

• A detailed technical documentation defining the UniswapV3 fundamentals and its porting to the eUTxO model, high-level description of the proposed on-chain components (Cardano smart contracts) and their validations responsibilities with flow diagrams for each interaction type.

Acceptance Criteria

• The documentation provides a detailed explanation of the product's structure and functionality
• The documentation contains transaction diagrams and definitions of necessary data types like: Datums, Redeemers, Parameters
• The document explains how to achieve Uniswap v3 functionality on Cardano

Evidence of Completion

• The technical documentation is available in the project's repository at: https://github.com/CardanoProphet/uniswap-v3-cardano

Delivery Month

2

Cost

42500

Progress

20 %

Milestone Title

Smart Contract Development

Milestone Outputs

• The complete source code of the Plutus/Plutarch smart contracts implementing the UniswapV3 logic as outlined in the technical documentation
• Inline code documentation for each function
• Updated documentation with a "build" section

Acceptance Criteria

• The finalized smart contract code is fully functional, compiles without errors, and implements all the core functions like Swap, AddLiquidity, RemoveLiqudity, etc.
• The smart contract functions contain inline code documentation
• The new documentation section explains how to build the smart contracts

Evidence of Completion

• The full smart contract source code is published in the project's repository at: https://github.com/CardanoProphet/uniswap-v3-cardano
• The updated documentation is available in the project's repository at: https://github.com/CardanoProphet/uniswap-v3-cardano

Delivery Month

5

Cost

63750

Progress

50 %

Milestone Title

Testing, Benchmarking and Optimizing

Milestone Outputs

• Comprehensive smart contract test suite
  • Containing both positive and negative tests across all the operations (Swap, AddLiquidity, RemoveLiquidity)
• Benchmarking for each operation
  • ExCPU, ExMemory, Script Size
• Test vectors with descriptions

Acceptance Criteria

• The tests cover the whole flow of all the contract operations (Swap, AddLiquidity, RemoveLiquidity, etc.)
• Both positive and negative test cases are provided and documented
• The test vectors are explained in the source code in the form of comments
• The whole test suite runs successfully
• Benchmarks are provided for each operation (ExUnits and Script Size)

Evidence of Completion

• The whole test suite and benchmarks are publicly available in the project's repository at: https://github.com/CardanoProphet/uniswap-v3-cardano
• New "build" section of the documentation is available in the project's repository at: https://github.com/CardanoProphet/uniswap-v3-cardano

Delivery Month

6

Cost

21250

Progress

70 %

Milestone Title

Frontend and Backend services

Milestone Outputs

• Backend for handling the user queries and indexer for tracking the relevant UTxOs
• Frontend for allowing users to interact with the dApp
• Updated documentation now containing how to deploy FE & BE steps
• Integration of a memorabilia NFT minting module within the dApp (as part of the community engagement and feedback plan)
• Deployment of the DEX dApp to the preprod testnet

Acceptance Criteria

• The website backend can be run locally on a development machine without problems
• The website frontend can be run locally on a development machine without problems
• Documentation contains the new "deploy" section containing the deployment instructions
• Users can successfully mint memorabilia NFTs within the dApp
• The deployed website is available to the public with stable performance and no operational errors

Evidence of Completion

• The backend code is publicly available in the project's repository at: https://github.com/CardanoProphet/uniswap-v3-cardano
• The frontend code is publicly available in the project's repository at: https://github.com/CardanoProphet/uniswap-v3-cardano
• The updated documentation publicly available in the project's repository at: https://github.com/CardanoProphet/uniswap-v3-cardano
• The code related to the NFT minting module is publicly available in the project's repository at: https://github.com/CardanoProphet/uniswap-v3-cardano
• Link to the deployed decentralized application

Delivery Month

8

Cost

42500

Progress

90 %

Milestone Title

Project Close-out Report and Video

Milestone Outputs

• Project Close-out Report
  • Providing a detailed summary of the project's overall achievements, and the milestones completed
  • Includes an overview of each milestone, detailing the specific outputs, and how each milestone was successfully met
  • Summary of the final state of the UniswapV3 on Cardano project, including setup and usage instructions
• Project Close-out Video
  • A final project video demonstrating the complete solution
• Educational DeFi posts related to the concentrated liquidity AMMs
  • Minimum of three Twitter posts (as part of the community engagement and feedback plan)
• Conduct a public user test (as part of the community engagement and feedback plan)

Acceptance Criteria

• Final close-out report is publicly available
  • The close-out report clearly describes the project from start to finish, including setup details, tutorial, and milestone achievements
  • Complying with the requirements specified in the Catalyst documentation, here: https://docs.projectcatalyst.io/current-fund/general-information/project-close-out-report-and-project-close-out-video-pcr-and-pcv
• Final close-out video is publicly available
  • The video accurately showcases the project's core functionalities
  • Complying with the requirements specified in the Catalyst documentation, here: https://docs.projectcatalyst.io/current-fund/general-information/project-close-out-report-and-project-close-out-video-pcr-and-pcv
• Educational posts are publicly accessible and written in a way that is understandable to non-technical audiences
• Reported bug and improvement requests are resolved

Evidence of Completion

• Link to final close-out report published on Medium and shared on X at https://x.com/CardanoProphet
• Link to final close-out video posted and shared on X at https://x.com/CardanoProphet
• Links to the educational posts published on X
• Link to the optimization report, containing user suggestions, issues reported, and how they were addressed

Delivery Month

9

Cost

30000

Progress

100 %

[Final Pitch] Budget & Costs

Please provide a cost breakdown of the proposed work and resources

The proposed budget is structured at ~22,222 ADA for 2 developers per month, with the project expected to take approximately nine months to complete, totaling 200,000 ADA.

Total project budget: 200,000 ADA

Milestone 1: Architecture and Technical documentation

• 42,500 ADA (21.25% of the total budget)
• Estimated time: 8 weeks

Milestone 2: Smart Contract Development

• 63,750 ADA (31.875% of the total budget)
• Estimated time: 12 weeks

Milestone 3: Testing, Benchmarking and Optimizing

• 21,250 ADA (10.625% of the total budget)
• Estimated time: 4 weeks

Milestone 4: Frontend and Backend services

• 42,500 ADA (21.25% of the total budget)
• Estimated time: 8 weeks

Milestone 5: Project Close-out Report and Video

• 30,000 ADA (15% of the total budget)
• Estimated time: 4 weeks

[Final Pitch] Value for Money

How does the cost of the project represent value for the Cardano ecosystem?

Delivering UniswapV3-like concentrated liquidity smart contracts on Cardano will significantly increase the competitiveness of the Cardano DeFi ecosystem. A more capital-efficient DEX model will help close the gap with leading ecosystems like Ethereum, attracting higher TVL, improving yields for liquidity providers, and offering traders lower slippage and better execution.

For the requested amount, this project represents outstanding value:

• Open-source delivery means any existing Cardano DEX (Minswap, SundaeSwap, WingRiders, etc.) can adopt the code, fork it, or build upon it without starting from scratch.
• Educational impact: Through detailed documentation and a series of educational posts explaining how concentrated liquidity works and why it matters, this project will elevate the technical literacy of both developers and users, empowering the ecosystem to move beyond outdated constant-product models.
• Improving stablecoin resilience and capital efficiency: Concentrated liquidity pools solve, at least partially, the systemic inefficiency that prompts proposals to inject tens of millions of ADA into stablecoin liquidity. Instead of requiring increasingly large liquidity budgets, UniswapV3-style AMMs deploy liquidity where it is actually needed, achieving deeper markets without escalating capital requirements.
• Reducing artificial price dislocations such as the DJED "incident": The dramatic DJED "depegging" episode was not caused by the protocol failing, but by shallow, inefficient liquidity on V2-style DEXes. Concentrated liquidity allows depth to be focused around critical price points (such as $1), making similar events significantly less likely and protecting both traders and the overall user experience.
• This work lays the groundwork for advanced DeFi strategies, and novel financial products that are currently not feasible on Cardano.

Given the potential TVL growth, fee generation, and improved user experience this upgrade will bring, the cost of development is minimal compared to the long-term economic benefit for the ecosystem.

[Self-Assessment] Self-Assessment Checklist

I confirm that evidence of prior research, whitepaper, design, or proof-of-concept is provided.

Yes

I confirm that the proposal includes ecosystem research and uses the findings to either (a) justify its uniqueness over existing solutions or (b) demonstrate the value of its novel approach.

Yes

I confirm that the proposal demonstrates technical capability via verifiable in-house talent or a confirmed development partner (GitHub, LinkedIn, portfolio, etc.)

Yes

I confirm that the proposer and all team members are in good standing with prior Catalyst projects.

Yes

I confirm that the proposal clearly defines the problem and the value of the on-chain utility.

Yes

I confirm that the primary goal of the proposal is a working prototype deployed on at least a Cardano testnet.

Yes

I confirm that the proposal outlines a credible and clear technical plan and architecture.

Yes

I confirm that the budget and timeline (≤ 12 months) are realistic for the proposed work.

Yes

I confirm that the proposal includes a community engagement and feedback plan to amplify prototype adoption with the Cardano ecosystem.

Yes

I confirm that the budget is for future development only; excludes retroactive funding, incentives, giveaways, re-granting, or sub-treasuries.

Yes

[Required Acknowledgements] Consent & Confirmation

I Agree

Yes