Excalibur: The Once and Future DEX


Excalibur is a new decentralized exchange protocol built off the widely utilized UniswapV2 contracts. Excalibur differentiates itself from the competition by incorporating several new features into the typical decentralized exchange (DEX) structure. The protocol has implemented revenue sharing in the form of dividends, time-vault staking, variable swap fees, a protocol owned liquidity model and a bonding system. The stated goal of the protocol is sustainability and capital efficiency for partnered protocols and users alike. To this end the team has sought to create a flexible system that can evolve to meet the changing needs of market participants.

How it Works

Excalibur is a decentralized exchange built off Uniswap’s V2 contracts. This is the standard for most DeFi software as it allows for the creation of liquidity pools, distribution of exchange fees and the emission of tokens as incentivization. The protocol’s two tokens are GRAIL, the governance and revenue sharing token, and EXC, the farming rewards token.

The fundamentals of the protocol are quite simple: provide liquidity and earn fees and rewards. Where Excalibur distinguishes itself is its tokenomics and distribution of fees and rewards. Below you will find a diagram that illustrates the flow of fees. As we delve into the protocol this may serve as a useful cheat sheet for developing your own strategies. 


Excalibur offers the following services to users:

1. Swapping assets

           a) Transaction fee mining

           b) Swap Referral

2. Staking assets, which can be done in two ways:

            a) Time-locked

            b) Standard

3. Dividends

            a) Only available for GRAIL holders

4. Bonding

            a) Users can provide LPs to the Treasury in exchange for Grail. 

            b) Each bond contract is short term with limitations on deposit amount to prevent dilution and inflation.

5. Share Redemption

            a) Burn GRAIL for EXC

6. Approved Referrer Program

            a) A way for Excalibur to incentivize partners to direct transactions to the exchange.

Each of these services is implemented in a unique way on Excalibur. We will discuss these unique characteristics and their purpose below.


Excalibur provides transaction fee mining on whitelisted swap pairs for users only. In plain English, users are reimbursed their swap fees in EXC for supported trading pairs. These reimbursements must manually be claimed on the swap page. This feature only works for users with wallets and does not work for other smart contracts interacting with the DEX.

Swap Referral Program

The swap referral program rewards Excalibur’s partners with a percentage of the swap fees on swaps the partner routes through Excalibur. This only applies to whitelisted partners that have engaged with the team. A whitelist is a list of addresses that are given special access or permissions to a smart contract. These are handpicked by the team as they need to be vetted for trustworthiness.


Each farm on Excalibur has three slots for each user. One is for regular staking i.e. you can deposit however much whenever you want and withdraw whenever you want. The other two slots are for locked staking. Users may lock their assets in the protocol for 1 to 30 days for additional reward tokens. Users can receive up to 50% more rewards for a 30 day lock. 

These slots allow users to create custom strategies by mixing locks of varying lengths to create a unique risk profile. Because the locks are also adjustable in length this allows a user finer control over these risk horizons. 

Excalibur benefits by retaining access to user liquidity for a guaranteed window of time.

Users receive different rewards based on the assets they stake. Most farms will reward users with EXC. Farms with EXC pairs like EXC/FTM will reward Grail.


Users who hold the GRAIL token qualify for Excalibur’s dividends. These rewards are emitted continuously on a daily cycle. Users are entitled to a percentage of the rewards equal to their share of the total GRAIL supply. Rewards are claimable at any time.

This dividend structure is one of the ways Excalibur attempts to incentivize long term use of the protocol as GRAIL can only be obtained by farming with EXC or bonding liquidity positions. Both require increased exposure to the entire Excalibur ecosystem. 


Excalibur offers bonding contracts that pay bonders in GRAIL. These contracts are offered by the protocol to develop their liquidity reserves in their treasury. They require a user deposit either EXC LPs or single asset tokens in exchange for vested GRAIL. User’s GRAIL is vested for a time period dictated by the bonding contract. 

For the user this system provides a way to access voting rights in Excalibur’s governance as well as a share of protocol revenue via GRAIL. To protect GRAIL holders from share dilution the bonds have deposit caps and limited time windows for entry. New bond contract rewards are also capped at 5% of the total GRAIL supply. 

Dilution – When you take a drop of lemon juice and drop it in a cup of water its taste is completely diluted, i.e. overwhelmed by the greater quantity of water. In any reward system the same thing can happen as the number of participants grows. If you are the only person who owns GRAIL you are entitled to 100% of the dividends but each other person that gets one reduces your share–dilution.

This system serves several functions for the protocol. First, this is a way for the protocol to build up their own liquidity as they accumulate more assets. Second, it allows the protocol to reduce the supply of EXC through these bonding buybacks. Finally, this allows the protocol to distribute its governance tokens to users who have a proven vested interest in the longevity of the protocol, they are literally paying for voting rights and revenue share.

Share Redemption

Users can burn their GRAIL tokens in exchange for EXC on Excalibur. The exact ratio depends on your average receiving time (ART) of GRAIL. The longer you’ve held your total GRAIL the more EXC you will receive in return. Your ART is reduced every time you receive a new GRAIL. The ratio ranges from 1 GRAIL for 0.7 EXC up to 1 GRAIL for 1 EXC. 

Fee Breakdown

There are two fees for using Excalibur: a deposit fee and a trading fee. Both vary between trading pairs and are subject to change via governance vote. After a recent governance vote, deposit fees are 0% on all farms. Swap fees are variable but can never be lower than 0.01% or greater than 2.0%. 

Fee Allocation

Trading fees are split between the Fee Manager Contract (FM Contract) and the liquidity providers. If the pool is participating in the Swap Referral Program the trading fees will be shared with a third party, the “Approved Referrer” or Excalibur partner. This is to incentivize other protocols to route swaps through Excalibur.

All deposit fees are routed to the FM contract. From the FM contract fees are redistributed to various allocations as dictated by the DAO. 

Trading Fee Allocation

  • Liquidity providers receive a minimum of 50% of all trading fees that accrue in their pool.
  • Up to 20% of the base trading fee can also be allocated to an “Approved Referrer” aka an Excalibur partner protocol.  
  • A maximum of 50% of all trading fees are routed to the FM contract (Fee Manager contract).

            a) Taking the above points all together allows us to construct some possible fee distributions.

                 1) Farm A: 80% to LP, 10% to FM, 10% to Partner

                 2) Farm B: 50% to LP, 30% to FM, 20% to Partner

      4. Trading fees have a hard floor of 0.01% and a cap of 2.0% for all trading pairs.

            b) These rates are dictated by the DAO.

Fee Manager Contract

Now, what does the FM contract do with all its fees? It distributes them much like other DEXs do. The FM contract routes funds in ratios determined by the DAO to the following: Team Treasury (max 20%), Project Owned Liquidity (40% max), SAFU Fund (2-10%) and Dividends for GRAIL holders (50% min.). 

Team funds are used for operating costs and salaries while the SAFU fund is reserved for incidents and bug bounties.


To participate in Excalibur governance a user needs GRAIL. The more GRAIL the more your vote matters. Users can stay up to date on current and ongoing proposals by joining the Excalibur discord.

Once a proposal has passed, it is up to the committee of team members and advisors to execute. The final review by the team and advisors is critical as they can reject proposals submitted by the committee. This is done “to prevent bugs or ill-intended actors” pushing for malicious changes. 


GRAIL and EXC are both inflationary tokens which means there is no hard cap to their supply. They can be printed forever. This allows the protocol to provide rewards essentially forever as emissions will never run out. However, this can cause runaway inflation (see US Monetary Policy). This necessitates strict supply control mechanisms i.e. burning, infinite locks, anything to remove excess currency from circulation. Excalibur’s supply control measures will be described below.

The tokens share an emission rate. For example, if the emission rate is 100 tokens/day and half the farms reward EXC and the other half GRAIL then 50 EXC and 50 GRAIL will be emitted a day.  Initial emission rates for the tokens began at 1 token per second. The team will retain control of emission rates and regularly update the rate until the protocol has reached ‘stability’. Emission control will then be relinquished to the DAO to be decided by governance proposals.   

In addition to the tokens emitted to the farms, an additional 9.09% EXC is emitted to the team treasury. So if 100 tokens are emitted a day an additional 9.09 are emitted to the dev wallet for a total of 109.09 daily. These tokens have been earmarked for the team for marketing events, additional farm incentivization and partnership agreements. Any tokens not used are sent to the DAO’s multisig wallet.

Deflationary Mechanisms

Excalibur has implemented the following deflationary mechanisms:

  • Grail can be burned through the shares redeeming process.
  • EXC collected from swap fees routed to the Fee Manager are automatically burned.
  • Bonds contracts will regularly burn collected EXC.


The Excalibur protocol relies heavily on its profit-sharing mechanisms to attract both users and partnerships. These profit-sharing mechanisms are tightly bound to the native tokens, GRAIL and EXC. Because both rewards are inflationary the largest challenge the protocol will face is balancing the supply of both assets to ensure APRs are enticing enough for liquidity providers and dividend recipients without value dilution. The inflationary tokens give the project a potentially very long life span contingent on the DAO’s ability to balance its monetary policy.

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