Pearl v2: Concentrated Liquidity for RWAs

Pearl Exchange
7 min readMar 12, 2024


Pearl’s launch thesis was simple: Incentives are all that matter.

And in the four months between launch and the USDR depeg, that thesis was proven correct. Pearl demonstrated steady, sustainable growth, supported by a well-designed flywheel powered by off-chain sources of yield.

Some key stats to frame up past success:

  • Polygon’s largest native dex by TVL and second largest on the chain, with more TVL than Uniswap, Curve or Balancer
  • The third largest ve(3,3) dex in crypto
  • Third highest TVL of any project on Polygon

We’re about to embark on a new journey, natively deployed to a brand new chain with our product completely overhauled and ready for the upcoming cycle.

As we look towards the future, Pearl has the opportunity to offer customers across some of DeFi’s most popular chains the deepest liquidity for tokenized RWAs with a best-in-class experience on user rewards and swap efficiency.

The following highlights what’s to come in Pearl v2.


Pearl v2 will initially deploy on, the world’s first permissions Layer-2 chain for tokenized RWAs, built with Arbitrum Orbit. seeks to create the centralized liquidity hub for RWAs, offering an unparalleled blend of:

  1. Ethereum Security: inherits security from Ethereum, leveraging interactive fraud proofs pioneered by Arbitrum, ensuring stored transaction data cannot be changed or corrupted.
  2. Lower Costs: increased throughput to Ethereum Mainnet by moving computation and state-storage to our Layer 2. can process thousands of transactions in a batch, only posting the most important data back to Ethereum Mainnet, giving users the same security of Ethereum at a fraction of the costs.
  3. Faster Settlement: Arbitrum AnyTrust’s Data Availability Committee (DAC) expedites the settlement of transactions on

Combined with the advancements made to Pearl (details below,) we hope to create the optimal trading environment and capture the majority of on-chain trade volume in RWAs.

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Concentrated Liquidity (CL) has fast become a category standard in DEX design since its deployment in Uni v3. CL is simply the ability to provide liquidity within a specified price range, concentrating assets in the pricing band where you’re willing to provide liquidity for swaps.

Pearl’s CL pools have been custom-built to work seamlessly with rebasing tokens.

Pearl is one of the few DEXs in DeFi offering concentrated liquidity for rebasing assets, a massive technological and liquidity advantage over competitive projects. This allows us to offer extremely deep liquidity on rebasing, treasury backed stablecoins like USTB, rebasing real estate assets like Baskets and other rebasing, liquid-wrappers in the future.

While most other concentrated liquidity AMMs utilize Merkle implementations to calculate rewards off-chain. These solutions lack transparency and on-chain provability.

Pearl rewards are completely tracked and calculated 100% on-chain.

Pearl is the first CLAMM with complete rewards calculations on-chain, providing 100% transparency into the reward distributions, a fully trustless solution to liquidity incentives.


The drawback to CL is it requires constant position management to maximize earned fees and rewards. Automated Liquidity Management (ALM) tools have emerged as an easy way for users to manage these complex positions. We believe we’ve built a best-in-class ALM solution tailored to the needs of our users. Because of the complex nature in providing concentrated liquidity, we are defaulting users to the ALM to reduce friction and confusion in the liquidity provision process.

Trident by Pearl is our ALM solution to the risks and complexities of providing concentrated liquidity.

Trident optimizes liquidity performance on Pearl, attempting to limit impermanent loss while seeking to maximize rewards accrual using our proprietary strategy.

Trident transactions are 100% on-chain with results that are fully transparent and auditable.

The ALM has on- and off-chain components. The off-chain element calls an on-chain rebalancing function, but doesn’t have direct access to the assets in the pool. It can only specify a new range for the ALM to provide liquidity, and deploy unused tokens.

Trident is also designed to resist sandwich-style manipulations and attacks and mask strategic intent by simply watching the mempool.

Trident represents a major step forward in ALM, transparency, efficiency and user experience.


While we were happy with growth and PEARL price performance, we felt there were improvements to make in optimizing against vePEARL dilution supporting bribe efficiency (positive ROI for bribers) moving forward.

A positive bribe ROI merely means that the bribe value spent is less than the value of emissions secured for those bribes. Paying $100 in bribes for $150 in emissions is a positive bribe ROI. This opens the door to more external bribers as protocols are simply looking for bribe efficiency to justify this spend/investment.

There’s also the issue of dilution and the impact it has on returns. Dedicated ecosystem participants feel the squeeze of inflation on the performance of their vePEARL investments.

The inflation protection maximum has been lifted to 70% to minimize vePEARL dilution.

In a Snapshot vote passed on February 28th, vePEARL voters approved adjusting the max inflation protection rate to 70% with the ability to recalibrate in the future pending approval from the DAO.

We believe this is the optimal path to accelerating bribe efficiency while minimizing dilution for committed ecosystem participants, opening up our ability to more aggressively pursue BD and the protocol partnerships necessary to support the next phase in Pearl’s development.

The vePEARL contract has also been rewritten, optimizing it to maximize rewards for the holder.

Pearl v2 implements non-decaying voting power. Unlike the previous system, vePEARL voting power does not decay over time by default. There is no need to relock the vePEARL position at any time to maintain vote share. Instead, users will need to deposit vePEARL into the vesting contract to reduce lock duration and voting power.


With issues around bribe efficiency solved as a result of the proposal above passing, Pearl BD efforts will be ramped up under an initiative we’re calling Project Marlin.

Through this program, we’ll begin to target projects we can support with liquidity incentives on Pearl. Key criteria we’ll be looking at:

  • RWA protocols (preferred)
  • Ecosystem partners
  • Stablecoin issuers
  • Top-tier DeFi projects and dApps

We will maintain the current level of protocol/token quality on Pearl as we speak with projects open to deploying natively on while also working to bring new protocols to deploy cross-chain through this program. and Pearl will recycle bribes from epoch to epoch, leading to an expanding bribe pool and liquidity on Pearl over time. Protocols must agree to a flat (or increasing) weekly bribe spend on their end and to pair their token with $USTB.

We’ve already seen this strategy work on Pearl. In a matter of weeks, Preon Finance established over $3MM in liquidity for their stablecoin $STAR at a total expense to the protocol of ~$55k.

This combination of bribe ROI and bribe recycling will lead to a massive expansion in our ecosystem partnerships, accelerating TVL growth on


The Pearl UI has been completely overhauled.

The swap UI now features expanded details and pricing for the assets trading on Pearl so you can transact with confidence.

A new dashboard consolidates liquidity positions, locks and rewards for comprehensive asset management all in one palace. The dashboard features the option to set global, account-based preferences on all future trades and conveniently tracks your trade history made on the protocol.

CAVIAR has moved to Pearl.

CAVIAR, the liquid wrapper for vePEARL, now conveniently lives on Pearl. Once users have migrated their CVR to, and emissions/bribes have resumed on Pearl, the token will continue to work seamlessly in its new environment. Soon after deployment we will be launching an auto-compounding CVR token to use on Stack, letting users leverage up yields even higher.


The final piece in the v2 roadmap is the cross-chain deployment of Pearl.

In 2024 Pearl will expand cross-chain.

While the initial launch will be limited to, over the course of the year Pearl’s deep liquidity for tokenized RWAs will move multi-chain. Pearl’s successful flywheel will offer RWA protocols throughout DeFi a liquidity and incentive hub built for their needs. Pearl will be THE cross-chain destination for RWA users across the cryptoeconomy.


We’re proud of what we accomplished in just a short period of time on Polygon, a successful ve(3,3) dex and a thriving community. But builders keep building and we’re ready to deploy a cross-chain CLAMM with the latest features and protocol design to rival any DEX in DeFi.

The pool’s wide open, it’s time to dive in.



Pearl Exchange

The premier liquidity layer on Polygon and first DEX to focus on tokenized real world assets.