How CenturionDEX v2 works

Last modified: April 16, 2026

 Liquidity Provider          Trader
        |                      |
        v                      v
 +-------------+  +-------------------------+  +-----------+
 |   Deposit   |->| CenturionDEX Pool       |<-|   Swap    |
 |             |  |                         |  |           |
 | Input:      |  |  Reserves               |  | Input:    |
 |  10 Token A |  |  +-------+ +--------+  |  |  10 A     |
 |  + 1 B      |  |  | 100 A | |  10 B  |  |  |           |
 |             |  |  +-------+ +--------+  |  | Output:   |
 | Output:     |  |                         |  |  1 B      |
 |  4 LP Shares|  |  Liquidity Shares       |  |           |
 +-------------+  |  +------------------+  |  +-----------+
                  |  | 12 Pool Tokens   |  |
                  |  +------------------+  |
                  +-------------------------+

CenturionDEX v2 is an automated liquidity protocol governed by a constant product formula and implemented as a system of non-upgradeable smart contracts on the Ethereum blockchain. It requires no trusted intermediaries and prioritizes decentralization, censorship resistance, and security. CenturionDEX v2 is open-source software licensed under the GPL.

Each pair contract manages a liquidity pool holding reserves of two ERC-20 tokens.

Anyone can become a liquidity provider (LP) by depositing an equivalent value of each token. In return they receive pool tokens representing their pro-rata share of total reserves, redeemable at any time.

 Liquidity           CenturionDEX Pair (A/B)
 Provider
    |        Increased liquidity reduces price
    |        slippage for trades.
    |
    |          Token B                Reserves
    |            |                    +--------------+
    |            | \                  | 1210 Token A |
    v            |  \  <-- before     +--------------+
 +-----------+   |   \.
 | Deposit   |-->|    .\              Liquidity Shares
 |           |   |    . \  low        +--------------+
 | In: 3 A   |   |    .  . slippage   | 12 Pool      |
 |   + 1 B   |   |    .   .<- after   |    Tokens     |
 |           |   |    .    .          +--------------+
 | Out: 12.4 |   +----'----'-----
 | Pool Tkns |       Token A
 +-----------+
              Price curve: x * y = k

Pairs act as automated market makers: they accept one token for the other as long as the constant product x * y = k is preserved — trades must not change the product of a pair's reserve balances. Because k is unchanged from the reference frame of a single trade, it is called the invariant. This formula causes larger trades (relative to reserves) to execute at exponentially worse rates than smaller ones.

In practice, a 0.30% fee is charged on every trade and added to reserves, so each trade increases k. This serves as a payout to LPs, realized when they burn pool tokens to withdraw their share. A future protocol upgrade may reduce the LP fee to 0.25%, directing the remaining 0.05% to a protocol-wide charge.

 Trader               CenturionDEX Pair (A/B)
    |
    |        Trades change the balance of reserves
    |        resulting in a new price.
    |
    |          Token B                Reserves
    |            |                    +----------------+
    |            | \                  | ~1203.009 A    |
    v            |  . <-- before      +----------------+
 +-----------+   |   \
 | Swap      |-->|    \               Liquidity Shares
 |           |   |     \  low         +----------------+
 | In: 3 A   |   |      . slippage   | 12 Pool Tokens |
 | + 0.3% fee|   |       .<-- after   +----------------+
 |           |   +--------'------
 | Out:      |       Token A
 | ~0.997 B  |
 +-----------+   Pool End: ~1203 / ~399 = ~3.015
                                   --> Next price
              Price curve: x * y = k

Because pair prices can only move through trading, any divergence from external market prices creates an arbitrage opportunity. This mechanism keeps CenturionDEX v2 prices aligned with the broader market.