Clipper's novel DEX design was created to optimize prices on trades below $50K.

Clipper's FMM Architecture

Clipper is implemented using a Formula Market Maker (FMM). FMMs are a combination of on- and off-chain architecture - you can think of them as a hybrid between opaque off-chain RFQ systems, and entirely on-chain automated market makers (AMMs).

Optimization for Optimism

Optimism is different because it's not an entirely separate chain. Rather, it anchors its data back to Ethereum. That means every transaction on Optimism has a small fee in Ethereum which goes to the Ethereum network. Basically, the existence of the transaction on Optimism is recorded on Ethereum. This happens by recording the input calldata of every transaction on Optimism. Of course, gas is very expensive on Ethereum and so a transaction with bloated calldata could cost several dollars, even on Optimism. Clipper is laser focused on retail traders, which means minimizing costs is very important! A few dollars can make a big difference on a small trade. To handle this, we didn’t just copy and paste Clipper’s contracts from Polygon to Optimism. Instead, we wrote custom methods that used compressed calldata - reducing Clipper transaction costs by about 50%. This will help Clipper have by far the best prices for small trades on Optimism. We suggest other protocols and forks do this as well if they care about their users.