How It Works: Core + Plugins
Last updated
Last updated
Schematically, the Algebra architecture for a specific pair can be represented as a core, which is a crucial part that stores the pair’s liquidity and implements the swap logic. In addition, there are exchangeable modules, known as plugins, that interact with the pool.
Core — Immutable logic for liquidity storage and swap calculations. Secure, audited, and unchangeable.
Plugins — Interchangeable smart contracts that extend pool functionality and can be updated independently of the Core.
This design ensures that the most sensitive operations (like token storage and pricing math) remain secure, while peripheral features can evolve quickly to support emerging use cases.
The Algebra ‘Integral’ architecture offers extensive customization options for the logic of all protocol pools, including individual pools. Plugins play an important role in this customization.
Technically, plugins are peripheral smart contracts connected to individual liquidity pools. A plugin can:
Adjust swap fees dynamically based on volatility
Act as an on-chain oracle
Implement farming or reward systems
Perform additional custom checks
Interact with external contracts
Introduce business logic like KYC or whitelisting
Plugins cannot access user funds directly, nor can they modify the Core’s pricing logic — maintaining user trust and protocol integrity.
Note: Currently, one plugin can be initialized per pool. Future architecture will support multiple plugins via a Proxy Plugin system.
Algebra Integral is more than a protocol — it’s a foundation for long-term innovation. Future plugin modules may include:
Elastic and dynamic fee markets
Gas discount or reimbursement systems
KYC/whitelist/blacklist integration
LVR (Loss vs Rebalancing) mitigation tools
Anti-JIT liquidity solutions
Support for perpetuals and advanced derivatives
Each pool can be connected to a smart contract that aligns with the plugin specification for the Algebra Protocol. By utilizing hooks (calls from a pool before or after specific actions), a plugin can extend, enhance, or modify the standard behavior of liquidity pools. Hooks include:
beforeInitialize / afterInitialize
beforeModifyPosition / afterModifyPosition
beforeSwap / afterSwap
beforeFlash / afterFlash
This event-driven architecture ensures Plugins can operate seamlessly with the Pool, reacting to changes and executing custom logic exactly when needed.
On the other hand, it is also possible to operate without any plugins, creating a pure AMM without unnecessary functionality from the protocol. This flexibility allows for easy adaptation to external requirements and enables maximum gas savings by disabling secondary logic when not needed.
The protocol has the capability to replace plugins for pools at any time, allowing for continuous development and the addition of functionality based on user or partner needs. As a result, Algebra AMM can be configured in various ways to accommodate specific market or environmental requirements. However, it maintains a solid and proven core of concentrated liquidity logic that remains consistent across different configurations.
