Liquidity & Graduation
At graduation, a Factory token is seeded into a custom Algebra V4 pool with concentrated, dual-sided liquidity and dynamic, volatility-adjusted fees. The LP NFTs are sent to Harvester and never move again - only the fees they earn do.
The pool is created at launch
The pool for a Factory token is not created at graduation - it's created during the token's deploy transaction, before any trading happens. The Liquidity Manager:
- Derives the target ETH for graduation from the bonding-curve parameters.
- Validates the token's ordering relative to WETH and the tick ranges.
- Creates the custom Algebra V4 pool at a starting price derived from the very first bonding-curve price.
- Optionally creates a small default POL pool alongside it.
The custom pool runs through Cypher's fee plugin, which is what makes its post-graduation fees configurable and dynamic. It does not start receiving liquidity until graduation actually happens.
Seeding the LP at graduation
At graduation the Liquidity Manager receives the token's accumulated WETH and its 200M LP reserve, then:
- Splits the liquidity 95% / 5% between the custom pool and the default POL pool when POL is enabled. If POL is disabled, 100% goes into the custom pool.
- Mints two concentrated positions per pool - one centred around the token side of the curve, one centred around the WETH side. This produces a dual-sided book at the seed price so the pool can absorb both buys and sells from tick zero without rebalancing.
- Transfers the resulting position NFTs to Harvester.
The NFT positions are permanently locked. Only the swap fees that accrue on them can ever be collected.
Harvester
Harvester is the permanent custodian of every Factory LP position. It exposes only two actions, both restricted to the protocol owner and an authorised worker address:
- Collect - sweep fees from a single position.
- Multi-collect - sweep fees from many positions in one transaction.
The worker exists so a routine bot can sweep fees without holding ownership of the entire LP book - a small operational separation that matters at scale.
Post-LP fee distribution
Once liquidity is live, swap fees on the custom pool break into three streams. Full mechanics are on Fees & Revenue; the summary is:
| Stream | Where it comes from | Split |
|---|---|---|
| LP position fees | Fees accrued on the LP NFTs themselves | 100% to Protocol |
| Plugin WETH fee | The WETH side of swap fees on the custom pool | 25% Protocol / 75% Fee Receiver |
| Plugin Coin fee | The token side of swap fees on the custom pool | Community share to Staking Vault, remainder to Fee Receiver |
If a token launched without a Staking Vault, the coin-side stream falls back to the same 25 / 75 split as the WETH side.
Seed math at a glance
For the standard configuration shown in the bonding-curve image:
- ETH raised through trading: ~2.36 ETH
- Total fees over the curve: ~5.1% (~0.12 ETH)
- ETH delivered to LP: ~2.24 ETH
- Tokens delivered to LP: 200M (the LP reserve)
- Seed FDV on Algebra V4 (post-fee): ~$32.24K
- Total LP value at seed: ~$11.61K (ETH side $5.16K, token side $6.45K)
- Liquidity / market-cap ratio: ~1 : 2.78
That ratio is what makes graduated tokens immediately tradable for non-trivial size - the LP is roughly a third of the seed FDV, so the book absorbs real volume before slippage gets ugly.
Why two positions per pool
Algebra V4 positions are concentrated, which means an LP position only earns fees inside its tick range. By minting one position below the seed price (WETH-heavy) and one above it (token-heavy), the pool can take both buys and sells out of the gate without anyone rebalancing the book. Both positions are owned by Harvester and earn independently.