Liquidity Manager Docs

The HOT AMM is a Liquidity Module (LM) attached to a Valantis Sovereign Pool. More information about the Sovereign Pool <> LM architecture can be found in the Sovereign Pool documentation.

A Liquidity Module is the Sovereign Pool module that defines the pricing logic for swaps, as well as control of deposits and withdrawals into the pool.

Each Sovereign Pool has a unique and immutable Liquidity Module attached to it, in this case, it is the HOT AMM Liquidity Module.

The HOT AMM has the following roles:

1. It holds the business logic for swaps. Although users interact with the Sovereign Pool as the entry point for swaps, the Sovereign Pool internally refers to the HOT AMM for pricing logic, i.e. the amount of input and output token that a user sends and receives, respectively.

2. LPs deposit and withdraw liquidity through the HOT AMM contract. Although token reserves are stored in the Sovereign Pool itself.

3. The HOT AMM is a special case of a Liquidity Module that also controls the swap fee logic, hence it also implements the Valantis Swap Fee Module interface. This means Sovereign Pool’s Swap Fee Module address is also set to the HOT AMM address.

Note: An HOT sovereign pool should be constructed so that

LiquidityModule address == SwapFeeModule address == HOT deployment address

or the system may not function as intended.

This section provides a detailed description of the different roles which are relevant to the HOT Liquidity Module, as well as expanding on the most important integration aspects and security assumptions from the perspective of a Liquidity Manager (also known as Market Maker).