The decentralized exchange (DEX) landscape has evolved rapidly over the past few years, yet significant challenges remain. Traditional DEX architectures are often monolithic, rigid, and plagued by liquidity fragmentation, which limits the efficiency of liquidity providers (LPs), traders, and developers. Furthermore, launching a new DEX from scratch in this paradigm demands extensive code development, high audit costs, and prolonged security checks. This complexity slows innovation and introduces potential vulnerabilities, making it harder to address diverse market needs.

Enter Valantis—a new, modular protocol designed to overcome these limitations. Valantis offers a flexible framework for building decentralized exchanges, giving developers and traders the tools to deploy custom DEX architectures while mitigating traditional challenges like liquidity fragmentation. Through Valantis, liquidity can flow seamlessly between DeFi protocols, enabling more efficient capital use and empowering new DeFi strategies.

What is Valantis?

At its core, Valantis is a protocol designed to redefine the DEX landscape by offering unmatched flexibility and composability. Unlike traditional DEXes, Valantis co-founded by Greg Vardy and Eduardo Carvalho allows for custom decentralized exchange designs through its modular framework, where components, or “modules,” can be independently developed, reused, and customized. This system enables developers to build bespoke DEX solutions without the complexity and rigidity of current architectures.

The Mission And Vision of Valantis

The mission of Valantis is straightforward: to empower liquidity providers, developers, and traders with the necessary tools to push forward DeFi’s vision of a decentralized, open financial system. By removing liquidity fragmentation and creating reusable modules, Valantis opens the door to new decentralized financial markets that are faster, more secure, and more capital-efficient.

Valantis’s vision extends beyond solving the immediate problems of liquidity fragmentation. It aims to enable a future where developers can create new DEX products with ease, traders can access efficient markets, and liquidity providers can maximize their capital without being locked into restrictive systems. Valantis envisions a DeFi ecosystem unbounded by the limitations of one-size-fits-all exchanges, allowing for true financial innovation on-chain.

Use Cases of Valantis

Valantis presents many use cases that extend beyond the traditional realm of DEXes. It serves three main stakeholder groups:

• Developers: Valantis provides an ecosystem of reusable modules to leverage to build new DEX features with minimal coding effort. The protocol’s security-focused architecture ensures that new features can be implemented without exposing the DEX to undue risk.
• Market Makers: Market makers can use Valantis’ HOT AMM to access non-toxic order flow and reduce exposure to latency arbitrage. This competitive advantage allows market makers to capture better trading opportunities in real time.
• Solvers: Solvers, who act as intermediaries in DeFi trading, can integrate directly with Valantis’ API to secure the best prices for trades, free from slippage. This makes Valantis an attractive platform for those building intent-based trading infrastructure.

Core Technology Behind Valantis: The Modules

The core of Valantis lies in its modular architecture, designed to provide a flexible, secure, and efficient decentralized exchange (DEX) experience. Each module plays a specific role in ensuring that liquidity flows seamlessly across the platform while maintaining the highest security standards and enabling custom designs for developers.

Liquidity Module

The Liquidity Module forms the heart of Valantis’ DEX functionality. This module defines the asset pricing logic within a pool, whether it’s using an Automated Market Maker (AMM), an order book model, or a custom-designed mechanism. It handles the complex task of ensuring that assets are priced appropriately and efficiently during swaps. What makes this module particularly powerful is its flexibility—developers can create custom pricing mechanisms to cater to specific use cases, allowing Valantis to support a broad array of liquidity strategies. Whether optimizing for deep liquidity or reducing slippage in thin markets, the Liquidity Module provides the underlying framework for asset pricing, ensuring seamless and accurate trades.

Sovereign Vault

The Sovereign Vault is a key component responsible for managing liquidity storage during every transaction—swaps, deposits, or withdrawals. This vault is the central point where liquidity is held and accessed, ensuring funds flow securely and efficiently between Valantis Pools and other DeFi protocols. This feature not only optimizes liquidity across various DeFi ecosystems but also addresses the issue of liquidity fragmentation, a persistent problem in decentralized finance. By using the Sovereign Vault, liquidity providers can contribute to multiple pools simultaneously without fragmenting their capital, maximizing the efficiency of their liquidity provision.

Swap Fee Module

Unlike many traditional DEX protocols that have fixed swap fees, the Swap Fee Module in Valantis introduces a dynamic, programmable fee system. This allows developers to create flexible fee structures that can be adjusted based on specific market conditions, trading volumes, or pool activity. For example, fees can increase during periods of high volatility to protect liquidity providers from impermanent loss or decrease during periods of low volume to attract more trading activity. This adaptability is key to making Valantis more competitive and attractive to both traders and liquidity providers while maintaining an optimal balance between fee revenue and market participation.

Oracle Module

The Oracle Module in Valantis serves as an on-chain data aggregator, allowing DEX developers to integrate custom oracles based on real-time data like price movements, volatility levels, or other relevant financial indicators. Oracles are critical in decentralized finance, especially for price feeds in AMM pools, and Valantis’ Oracle Module ensures that accurate, up-to-date information is always available. By allowing developers to build their own oracles or integrate existing ones, the Oracle Module provides the flexibility to create custom solutions for specific market needs, ensuring more accurate price discovery and reducing the risk of manipulation.

Verifier Module

Security is paramount in the DeFi space, and the Verifier Module ensures that only authorized users can interact with Valantis Pools. This module manages access to deposits, swaps, and withdrawals, creating an additional layer of protection against unauthorized activity or malicious attacks. It also ensures that specific user permissions can be enforced, providing greater control over who can access different parts of the system. This is especially valuable for institutional investors or larger liquidity providers who require higher levels of security and compliance.

Valentis Primary Pool Type

Beyond these modules, Valantis introduces two primary pool types that govern how liquidity is managed and routed within the ecosystem.

Sovereign Pools

These pools are designed with strict security assumptions, balancing developer flexibility with extensive smart contract security checks. Sovereign Pools are ideal for projects prioritizing security and wanting to maintain a higher level of control over liquidity. By enforcing these checks, Valantis ensures that the integrity of the protocol is preserved, even when developers are experimenting with new liquidity models or advanced DeFi applications.

Universal Pools

Universal Pools offer a more flexible alternative to Sovereign Pools by allowing in-pool routing across multiple Liquidity Modules. This means traders can access the best available liquidity across different pricing mechanisms within a single transaction. Universal Pools are optimized for efficiency and flexibility, making them ideal for more complex trading strategies or projects that want to maximize liquidity across multiple sources without sacrificing speed or cost.

Benefits of Valantis

Valantis delivers a wide range of benefits to the DeFi ecosystem, addressing critical challenges that both developers and liquidity providers (LPs) often face:

Mitigated Liquidity Fragmentation

One of Valantis’s primary benefits is its ability to reduce liquidity fragmentation, a common issue in DeFi where liquidity is scattered across different platforms, leading to inefficiencies. Valantis tackles this by enabling seamless liquidity sharing between its native pools and external DeFi protocols. This approach not only consolidates liquidity but also helps LPs optimize capital efficiency. With liquidity flowing more freely across platforms, users can ensure their capital is always allocated most productively, increasing potential returns while reducing the complexity of managing liquidity across multiple protocols.

Native Support for Rebase Tokens

Rebase tokens—such as stETH and other assets with dynamically adjusting supplies—are often poorly supported on many existing DEXes, limiting their utility in DeFi. Valantis, however, stands out by offering native support for these types of tokens. This opens up new opportunities for DeFi participants, especially those involved in liquid staking or managing assets with elastic supplies. Traders and protocols using rebase tokens can operate smoothly within the Valantis ecosystem, ensuring compatibility and composability without complicated workarounds or custom integrations.

Reduced Implementation Complexity

Valantis significantly lowers the barrier to entry for developers looking to launch new decentralized exchanges or liquidity protocols. By providing a set of customizable, pre-built modules, developers can easily build and deploy new DEXes without the need for extensive custom coding or lengthy auditing processes. This not only accelerates development timelines but also reduces costs, making it easier for new projects to enter the DeFi space without compromising on security or functionality.

Increased Security

Security is a top priority for Valantis, and all modules are independently audited to ensure their robustness. This audit process provides an added layer of assurance for developers and users alike, knowing that every component of the platform is thoroughly tested and proven to be secure before being deployed on-chain. This commitment to security helps build trust and confidence in the ecosystem.

HOT AMM: The MEV Combating Module

One of the most groundbreaking innovations of Valantis is its Hybrid Order Type (HOT) Automated Market Maker (AMM), a feature co-developed with Arrakis Finance.

The Hybrid Order Type (HOT) AMM is specifically designed to address one of the biggest pain points in DeFi—Miner Extractable Value (MEV)—and particularly latency arbitrage, a form of MEV that results in significant profit erosion for liquidity providers (LPs).

Latency arbitrage occurs when bots or sophisticated traders exploit the time delay between transaction submission and confirmation, taking advantage of price changes to secure profits at the expense of passive LPs. HOT AMM is built to mitigate this issue, preserving the integrity of DeFi’s core principle of permissionless liquidity.

How does Hybrid Order Type (HOT) work?

The HOT AMM combines two distinct modes of execution—an off-chain Request for Quote (RfQ) system and an on-chain AMM. This dual-layered approach separates the flow of liquidity from the trading actions, ensuring that passive LPs are protected from MEV attacks while maintaining competitiveness. The RfQ system allows Solvers to submit intent-based orders, which are executed off-chain, providing a private and controlled environment. Meanwhile, the on-chain AMM operates permissionlessly, meaning it can execute swaps without relying on off-chain infrastructure. This dual structure allows HOT AMM to mitigate the harmful effects of latency arbitrage and front-running by splitting the liquidity flow, protecting LPs from becoming targets of predatory trading strategies.

Key benefits of HOT

• Reduced MEV Exposure: HOT AMM is specifically designed to protect LPs from common MEV attacks such as front-running and latency arbitrage. Utilizing the dual-execution model, significantly reduces the risk to LPs, ensuring that liquidity provision remains profitable and secure.
• Competitive Pricing: By leveraging both on-chain AMM mechanics and the off-chain RfQ system, HOT AMM ensures that market makers and Solvers can always access the best possible prices for liquidity without compromising security or efficiency. This balance between decentralized security and competitive execution is critical for maintaining DeFi’s permissionless nature.
• Upcoming Public Launch: HOT AMM is currently in its final testing phases and will be released publicly in partnership with Arrakis Finance. This much-anticipated feature is expected to revolutionize liquidity provision by introducing a more secure and efficient method of executing trades on decentralized exchanges.
• Customizable Modules: Valantis prioritizes developer freedom, offering customizable modules that empower developers to create bespoke DEX designs tailored to their needs. This modular architecture reduces the need for complex, custom implementations, providing a more streamlined, efficient approach to building decentralized applications. Whether it’s adding specific trading features, adjusting liquidity management, or building unique user interfaces, the flexible nature of Valantis allows developers to create truly differentiated products that can cater to niche use cases.

Once launched, the HOT AMM will significantly leap forward in solving DeFi’s long-standing MEV issues. By reducing exposure to latency arbitrage and front-running, the HOT AMM will improve profitability for liquidity providers and attract a new wave of users to DeFi. Whether you’re a retail trader or an institutional market maker, HOT AMM promises to enhance your experience by offering safer, more efficient liquidity management and superior execution prices.

Conclusion

Valantis is a forward-thinking protocol that seeks to redefine how decentralized exchanges function. Its modular architecture empowers developers, liquidity providers, and traders alike by providing them with customizable, flexible tools that address the most pressing issues in DeFi—such as liquidity fragmentation, rebase token integration, and MEV protection. Developers and liquidity providers seeking to push the boundaries of what’s possible in DeFi should explore Valantis, whether by building on its architecture or participating in its growing ecosystem.