CPMM

Kinetic CPMM

Kinetic’s Constant Product Market Maker (CPMM) powers permissionless liquidity pools that serve as the backbone of token swaps across Solana. Designed for both retail traders and professional liquidity providers, the CPMM offers deep liquidity, transparent pricing, and flexible fee mechanics that evolve with market conditions.

Overview

The CPMM model follows the classic x × y = k invariant — the foundation of most AMMs — where the product of token reserves remains constant during trades. This ensures continuous liquidity at all price levels, with prices adjusting algorithmically based on pool balance.

Kinetic’s implementation extends the traditional CPMM design with:

  • Multiple fee tiers (for precision pricing and LP flexibility)

  • Aggregated routing (optimized through Kinetic’s trade router)

  • Real-time pool analytics and on-chain performance tracking

  • Upgradeable path toward SUPA hybrid batch auctions

How It Works

Each CPMM pool consists of two token vaults, a fee configuration, and a pool invariant:

x * y = k

  • x, y = Token reserves

  • k = Constant product

  • P = y / x = Implied price of token X in token Y

When a swap occurs:

  1. The trader provides one asset (e.g., SOL).

  2. The pool adjusts reserves to maintain the invariant.

  3. The price shifts based on trade size and pool depth.

  4. A small fee is collected and distributed to LPs.

Fee Tiers

Having more fee tiers creates a more efficient market.

Different assets have different risk and volatility profiles. A one-size-fits-all fee (e.g., 0.3%) is inefficient — it overcharges low-volatility pairs and under-rewards LPs in high-risk pairs.

Kinetic CPMM supports multiple fee tiers such as 0.01%, 0.05%, 0.30%, and 1.00%.

Type
Example Pairs
Fee Tier
LP Profile

Stable

SOL/USDC, USDC/USD1

0.01%–0.05%

Arbitrage & HFT LPs

Core Volatile

SOL/JUP, BONK/SOL

0.30%

Mid-risk yield seekers

Long-tail / Memecoins

FUN/SOL, COPE/SOL

1.00%

Risk-tolerant LPs

More fee tiers = better alignment between LP yield and trader cost. It allows the market to self-balance based on volatility, liquidity depth, and trader demand.

Pool Creation

Anyone can create a CPMM pool by:

  1. Selecting two SPL tokens

  2. Choosing a fee tier

  3. Providing initial liquidity

Once deployed:

  • Pool details (address, pair, fees) are indexed on Kinetic.

  • Pools become discoverable across the platform and aggregators.

  • LP tokens (representing share of the pool) are minted to depositors.

Requirements

  • Sufficient token balances

  • Proper decimals configuration (handled automatically in the UI)

  • Wallet connection to Solana mainnet

APR & Rewards

Liquidity providers earn trading fees proportional to their pool share. The APR (Annual Percentage Rate) is calculated as:

APR = (Total Fees Earned / Average Liquidity Provided) * (365 / Days Active) * 100

In the future, CPMM pools will integrate points and reward multipliers, allowing LPs to earn Kinetic rewards or future emissions from K-REWARD programs.

Design Principles

Principle
Description

Transparency

All swaps and fees are visible on-chain and through analytics dashboards.

Flexibility

Multiple fee tiers and upgrade paths allow adaptive market design.

Composability

Fully compatible with Kinetic Router, SUPA, and future smart order routing layers.

Scalability

Designed to support both retail and institutional liquidity flows.

Upgrade Path to SUPA

The CPMM serves as the foundation for Kinetic’s upcoming SUPA (Solana Unified Price Auction) AMM — a next-generation hybrid model that combines continuous CPMM liquidity with discrete batch settlement.

SUPA will build on CPMM’s fee-tier architecture and extend it with:

  • Batch auction settlement

  • Dynamic fee curves

  • MEV protection & priority routing

  • Integrated incentive hooks

CPMM is Phase 1 of Kinetic’s AMM evolution. SUPA will unlock Phase 2: auction-based price discovery.

Developer Notes

  • Program: kinetic_pools_cpmm

  • Endpoint: /v1/pools/cpmm

  • Pool Identifiers: {tokenA_mint}-{tokenB_mint}-{fee_tier}

  • Integration Example:

    GET https://api.kinetic.xyz/v1/pools/cpmm?pair=SOL-USDC&fee_tier=0.05

  • Response:

    {
  "pair": "SOL/USDC",
  "fee_tier": 0.05,
  "liquidity": "1,234,567 USDC",
  "volume_24h": "245,000",
  "apr_estimate": "17.4%"
}

Summary

Kinetic CPMM offers the most flexible, capital-efficient, and aggregator-optimized constant-product AMM on Solana — designed to evolve seamlessly into the SUPA era of unified price discovery.

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