NFT-less positions

Problem description

One significant limitation of Concentrated Liquidity Market Makers (CLMMs) is their use of non-fungible tokens (NFTs) to represent unique liquidity positions. This approach can not only hinder composability with other decentralized finance protocols that predominantly use fungible tokens but also introduce higher costs due to the creation and management of NFTs. Moreover, users often accidentally burn their NFT positions, leading to a permanent loss of assets.

Invariant solution

To solve these issues, Invariant replaces NFT-based positions with Program Derived Addresses (PDA). A PDA is a secure, unique address generated by a smart contract program, which holds the position without needing an NFT. This approach significantly reduces the costs associated with position creation and eliminates the risk of accidental burns, while still maintaining the flexibility and uniqueness of individual positions.