Brokoli’s DEX will use third-party DEXs like Uniswap, Sushiswap and others to act as a green gateway to other dApps without building its own infrastructure and liquidity pools. Brokoli’s DEX will leverage an automated market maker that gives liquidity providers more control over the price ranges in which their capital is used, with limited effect on liquidity fragmentation and gas inefficiency. This design does not depend on any shared assumption about the price behavior of the tokens. Because of that, we will be able to implement the flexible fees system used on other DEXs: the swap fee would no longer be locked at a fixed percentage of transaction, but variable according to the preferences of the liquidity provider. However, while in other platforms fees are taken by the exchange, Brokoli will use fees in a decentralised climate offsetting process. The supported fee tiers will range from 0.05% to 10% of the transaction based on liquidity provider’s preference.
The core concept that the Brokoli DEX will be based on is concentrated liquidity that allows it to charge a climate fee seamlessly on most transactions. This means that traders will bound liquidity within a specific price range, and will not be charged any more for the transaction. However, if the price range is not reached during a transaction, the difference counts as climate fee and is transferred to offset carbon footprint in a decentralised manner. As liquidity providers are free to choose smaller, flexibly chosen increments, a position would only require to keep enough reserves for trading in that range, and therefore can act like a constant product pool with larger reserves within that range. Furthermore, liquidity providers may reduce their transaction costs by concentrating their liquidity in a narrow range around the current price, and adding or removing tokens as the price moves to keep their liquidity active. This is enabled by there not being a limit of how many positions traders can open. However, it is expected that the ranges will generally be bigger on Brokoli than on other DEXs with similar concentrated liquidity structure as the fee goes towards transparent carbon offsets.