Clipper

Market Making

Clipper is a decentralized exchange built to optimize trading for small crypto traders with less than $10K in capital.

Risk Rating
Average
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Clipper is a novel decentralized exchange (DEX) that optimizes for small traders with the lowest per-transaction costs for popular crypto assets.
What we like less
To become a liquidity provider (LP) on Clipper, users must first whitelist in advance. The protocol is also governed by AdmiralDAO, which consists of a multisig wallet with no info on the signers or requirements.
What it means for you
Offers you a great DEX to place smaller-sized trades as well as the ability to earn yield across all platform trades through its liquidity pools.

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Information
Info
Key Metrics
  • TVL: $7M (Rank #154)
  • TVL Ranking by Market Making: #0
  • Blockchain: Ethereum, Mantle, Arbitrum, Optimism, Base, Polygon, Moonbeam
  • Chain TVL
    • Ethereum: $3.8M
    • Mantle: $1.33M
    • Arbitrum: $1.13M
    • Optimism: $373.46K
    • Base: $200.7K
    • Others: $134.09K
Risk Assessment
Average
Protocol Code Quality
  • Code reviewed by several experienced auditors including Quantstamp and Solidified
  • Public team promotes accountability
  • No documented protocol hacks since launch
Protocol Maturity
  • Core protocol launched in 2021; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Bottom 80% by total value locked increases risk
  • Multisig wallet controls protocol upgrades
  • Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
  • No timelock exists or no information documented, which mean a malicious actor could approve upgrades without any delay
  • No governance token and/or contracts are fully immutable
Protocol Design
  • No death spiral concerns
  • Robust controls to mitigate oracle price manipulation
  • This protocol is susceptible to risks related to decentralized exchanges (DEXs), such as impermanent loss
Things to know about Clipper

How Clipper works

Clipper is a DEX that is designed for smaller liquidity pools. This is done to counter the negative effects of liquidity overprovisioning on retail traders. Most automated market makers (AMMs) desire as much liquidity as possible because this means reduced slippage (the amount by which the exchange price worsens as the trade size increases) for traders. However, there are diminishing returns after a certain point, particularly for small trades. Further, the more liquidity in an AMM, the more fees or yield it generally needs to earn in order to attract more liquidity. As a result, large traders benefit largely at the expense of small traders. Clipper achieves this by minimizing trading, slippage and gas fees. The protocol minimizes trading fees by putting a cap on the size of the liquidity pool. Slippage is minimized through a new AMM invariant and consolidating liquidity for any N number of assets (versus the traditional two-asset pools). Clipper contracts have also been engineered to use less gas versus equivalent trades on competitor DEXs like Uniswap. The end result is that smaller trades on Clipper incur much lower trading fees that even outweigh the higher slippage (due to the smaller pool size). Conversely, trades that are large relative to the pool size will incur higher slippage that outweighs the lower fees. Clipper also minimizes the risk of impermanent loss through the use of an off-chain oracle that updates its prices without needing arbitragers to maintain the pool. The DEX is highly sensitive to arbitrage flow given the small pool size. This means every unit traded in the same direction increases slippage exponentially. Thus, Clipper uses the oracle to determine its prices and uses slippage to deter traders from significantly arbitraging prices in order to give the oracle sufficient time to update.

Providing liquidity on Clipper

Clipper has two unique methods to provide liquidity: Clipper Pools and Clipper Coves. Clipper Pools are multiasset liquidity pools consisting of core assets. Clipper LPs must whitelist their wallet address in advance before they can deposit liquidity. Deposits are also limited in size and locked for a mandatory period. Clipper Coves are an ecosystem of user-generated liquidity pools composed of one cove asset and ClipperLP tokens to enable the trading of any asset through Clipper.

How you make money on Clipper

You earn trading fees on Clipper by whitelisting your wallet address and depositing core assets into the Clipper Pools. Trading fees collected as an LP are added to the overall value of your deposit. LPs also collect fees from every transaction made on the protocol, regardless of the asset you initially deposited. You can also deposit cove assets into a cove to receive ClipperLP tokens in return to earn yield.

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Clipper Pools
Clipper Tricrypto Market Making
48.9%
Yield
$4M
TVL
Risk
C
Protocol
Clipper
Chain
Ethereum
Clipper Tricrypto-ARB Market Making
68.1%
Yield
$1M
TVL
Risk
C
Protocol
Clipper
Chain
Arbitrum
Clipper Tricrypto-LINK-OP Market Making
100.3%
Yield
$375K
TVL
Risk
C
Protocol
Clipper
Chain
Optimism
Clipper Tricrypto-MATIC Market Making
63%
Yield
$100K
TVL
Risk
D
Protocol
Clipper
Chain
Polygon

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