Knowledge Base
What is Cauldron?
The Cauldron Protocol is an open-source smart contract for providing liquidity and trading CashTokens on the Bitcoin Cash network. Cauldron operates as a non-custodial automated liquidity protocol, emphasizing openness, transparency, and user accessibility.
The Cauldron Protocol and the Cauldron Interface were developed by Riften Labs.
How do I use Cauldron?
You engage with Cauldron Dex for activities such as creating liquidity pools or swapping tokens by navigating to the Cauldron application interface. Connect a Bitcoin Cash wallet with WalletConnect or use the create a new in-browser Cauldron wallet.
Who is behind Cauldron?
Cauldron is developed by the Norwegian company Riften Labs AS.
Contact hello@cauldron.quest
How does Cauldron Dex work?
Cauldron Dex utilizes the automated market maker (AMM) model. It consists of a series of smart contracts that standardize the processes for creating liquidity pools, and swapping CashTokens.
Tokens
What tokens can be traded on Cauldron?
All fungable cashtokens are compatible. Cauldron DEX recognizes BCMR and CRC20 token metadata. Cashtokens is the native token support for the Bitcoin Cash blockchain.
Swapping tokens
When I swap MAX tokens, not all tokens are sold, why?
When not all tokens can be sold, as in, their not worth a single satoshi, it is sent back to your wallet.
If you want to get rid of it, you could send it to https://www.tokenburner.cash/
Liquidity provision
How Does Liquidity Provisioning Work on Cauldron Dex?
Liquidity provisioning on Cauldron Dex works through the creation of micro-pools. These are liquidity pools that individuals can set up, allowing them to earn a yield from the liquidity they provide. Anyone can provide liquidity to any token pair.
How can I earn by providing liquidity?
When you create a micro-pool on Cauldron Dex, you earn 0.3% of all transactions that occur through your pool. Importantly, liquidity providers (LPs) retain full ownership of their liquidity pool and receive 100% of the liquidity provider fees paid by users when swapping tokens in that pool (This is currently a standard 0.3% per swap)
Why provide liquidity?
Create a micro-pool and earn 0.3% off all transactions made through your pool. LPs own 100% of their liquidity pool and earn 100% of the LP fee paid by users when swapping.
Know what liquidity providers have a risk of impermanent loss.
What is impermanent loss?
Impermanent loss is the difference between holding tokens in your wallet versus staking them in a liquidity pool.
Impermanent loss occurs when the price ratio of tokens in a DEX pool changes from when they were deposited, potentially leading to less value upon withdrawal compared to just holding the tokens. It becomes permanent if assets are withdrawn while prices are diverged.
How do I see my rewards when viewing my liquidity position?
Your rewards are not shown as a separate balance — they are reflected in the growth of your pool's value over time.
To view your position:
- Connect your wallet to Cauldron
- Navigate to the Liquidity section
- Your micro-pools are listed with their current token and BCH balances
The balances you see include your earned fees. As trades occur through your pool, the 0.3% fee increases your pool's reserves, which grows the pool's constant product (K). The difference between your current K and initial K represents your earned yield.
When users swap tokens through your micro-pool, a 0.3% fee is charged, added to your pool's reserves, and your pool's K value increases. For example, if you created a pool with 100 TOKEN and 10 BCH (K = 1000), and after some trades your pool now holds 95 TOKEN and 11 BCH (K = 1045), the increase in K represents your earned fees.
The Cauldron interface shows an APY (Annual Percentage Yield) for your pool. This represents the annualized rate of return based on the fees earned. The yield calculation is based on the growth of √K over time. See Pool Yield for the detailed mathematical formula.
Trading
What are the trade fees?
Cauldron takes no trade fee. Liquidity providers take 0.3% LP fee. In addition, there may be some slippage. Slippage goes into the liquidity provider earnings. Finally, there is the Bitcoin Cash network fee.