Overview
Camelot launched in November 2022 as an Arbitrum-native decentralized exchange, positioning itself as the ecosystem DEX built specifically for and by the Arbitrum community. The protocol differentiated from generic DEX forks through custom features including volatile and stable AMM pools, a concentrated liquidity implementation, spNFT (staked position NFTs) for LP positions, a launchpad for new Arbitrum projects, and configurable pool parameters like directional fees.
Camelot gained significant traction in early-to-mid 2023, coinciding with the Arbitrum ecosystem boom and ARB airdrop. As one of the few native Arbitrum DEXs, it attracted ecosystem loyalty and served as a launchpad for several Arbitrum-native projects. The GRAIL token's relatively low supply and xGRAIL staking mechanics created a concentrated holder base and active governance.
As of early 2026, Camelot holds $50-150 million in TVL and maintains a loyal community, but its market share on Arbitrum has compressed as Uniswap, SushiSwap, and Trader Joe have expanded their Arbitrum presence. The protocol continues to differentiate through ecosystem integrations and custom features rather than pure liquidity depth.
Smart Contracts
Architecture
Camelot offers multiple pool types: volatile pools (custom constant product with directional fees), stable pools (optimized for pegged assets), and V3-style concentrated liquidity pools. The standout feature is spNFTs — LP positions are represented as NFTs that can carry additional properties like lock duration bonuses, yield boosts, and custom metadata. Directional fees allow pools to charge different swap fees depending on trade direction, useful for managing one-sided flows.
Code Quality
Camelot's contracts are written in Solidity and partially open source. The V2 AMM contracts are custom-built with features not found in standard Uniswap forks (directional fees, custom fee structures per pool). The concentrated liquidity contracts adapt established CLMM patterns. Code has been developed by a known, public team. The spNFT system adds complexity to the codebase compared to standard LP token models.
Upgradeability
Core AMM pair contracts are immutable after deployment. The dividend, staking, and spNFT contracts use proxy patterns for upgrades controlled by the team multisig. The Nitro Pool system (incentive pools) is configurable. Factory and router contracts follow standard upgrade patterns.
Security
Audit History
Camelot's V2 contracts were audited by Paladin and Pessimistic. The concentrated liquidity contracts received a dedicated audit. The spNFT and dividend systems were included in the core audit scope. As new features are added, incremental audits have covered additions to the protocol.
Bug Bounty
Camelot maintains a bug bounty program for responsible disclosure of vulnerabilities. The program covers core AMM, staking, and spNFT contracts. Maximum bounty values are in line with mid-tier DeFi protocols.
Track Record
Camelot has not suffered a major exploit of its core contracts. The protocol's relatively modest TVL compared to top-tier DEXs means it is a less attractive target, but the clean record is still notable. Some minor edge cases in the spNFT system were identified and addressed through the bug bounty program. Peripheral launchpad features have operated without significant security issues.
Liquidity
Depth & Stability
Camelot holds $50-150 million in TVL, concentrated on Arbitrum. Major pools include ETH/USDC, ARB/ETH, and various Arbitrum-native tokens. Liquidity depth is adequate for moderate trade sizes but significantly less than Uniswap or Trader Joe on Arbitrum. The protocol relies on ecosystem partnerships and incentives to maintain competitive liquidity levels.
LP Economics
LPs earn swap fees (configurable per pool, typically 0.3% for volatile, 0.04% for stable pairs). spNFT positions can be locked for boosted yields using xGRAIL allocation. Nitro Pools provide additional incentives from partner protocols. The layered incentive system (base fees + GRAIL emissions + Nitro rewards + xGRAIL boosts) creates multiple earning streams but adds complexity.
Capital Efficiency
Concentrated liquidity pools offer standard CLMM efficiency gains. The V2 pools with custom parameters allow some optimization but are fundamentally constant-product based. Overall capital efficiency is hampered by lower TVL — what liquidity exists is less concentrated than in larger pools. spNFT lock bonuses incentivize longer-duration positions, improving liquidity stability at the cost of LP flexibility.
Adoption
Volume & Users
Camelot processes $10-50 million in daily volume, with significant variability based on Arbitrum ecosystem activity. Unique daily traders number in the low thousands. The launchpad has hosted several Arbitrum-native project launches, driving periodic spikes in activity. Aggregator routing from 1inch, Paraswap, and others contributes a portion of volume.
Market Share
Camelot holds 3-10% of DEX volume on Arbitrum, competing with Uniswap (dominant), Trader Joe, SushiSwap, and others. Market share has compressed from the protocol's peak in 2023. For Arbitrum-native token trading and project launches, Camelot maintains a stronger niche position.
Multichain Presence
Camelot operates on Arbitrum and has expanded to Arbitrum-adjacent chains like Gravity and Sanko (Arbitrum Orbit chains). The protocol intentionally focuses on the Arbitrum ecosystem rather than broad multichain expansion, aligning with its identity as an Arbitrum-native community DEX.
Tokenomics
Token Overview
GRAIL has a maximum supply of 100,000 tokens — intentionally low to create scarcity. Distribution allocated tokens across liquidity mining, team, treasury, and early supporters. xGRAIL is the staked form, non-transferable and used for yield boosting, governance, and dividend allocation. The low supply creates high per-token prices but doesn't change effective market cap considerations.
Fee Distribution
Protocol fees (a share of swap fees) are distributed to xGRAIL holders through the dividend system. xGRAIL can be allocated to different plugins: dividends (real yield), yield booster (enhanced LP rewards), and governance. Users choose how to allocate their xGRAIL, creating a flexible but complex system. This fee-sharing model provides tangible value to committed token holders.
Governance
xGRAIL holders allocated to the governance plugin can vote on protocol proposals. The system is relatively centralized with the core team driving most decisions, but community input through forum discussions and snapshot votes shapes protocol direction. GRAIL's low supply means governance is concentrated among a smaller holder base.
Risk Factors
- Shrinking Market Share: Camelot's Arbitrum market share has declined as larger DEXs expand their presence. Competing against Uniswap's brand and liquidity depth on Arbitrum is increasingly difficult.
- Low Liquidity Relative to Competitors: With $50-150M TVL, Camelot cannot offer competitive execution for larger trades, limiting institutional and whale adoption.
- Arbitrum Ecosystem Dependency: Single-chain focus on Arbitrum means the protocol's success is tied to Arbitrum's ability to attract and retain DeFi activity amid growing L2 competition.
- Complexity Barrier: The spNFT, xGRAIL allocation, Nitro Pool, and directional fee systems create a complex user experience that may deter less sophisticated users.
- Low Supply Token Perception: GRAIL's 100,000 max supply creates high per-token prices that can mislead unsophisticated participants about market cap and valuation.
- Team Centralization: Despite community-driven branding, significant operational control remains with the core team, including contract upgrades and partnership decisions.
Conclusion
Camelot carved out a unique niche as an Arbitrum-native community DEX with genuinely innovative features like spNFTs, directional fees, and a comprehensive launchpad. The xGRAIL dividend system provides real yield to token holders, and the low-supply tokenomics create a distinctive market structure. The protocol's commitment to the Arbitrum ecosystem has built genuine community loyalty.
However, Camelot faces significant challenges in maintaining relevance as Arbitrum's DEX landscape matures. Larger, better-funded competitors continue to capture market share. The protocol's best path forward likely involves doubling down on ecosystem partnerships, launchpad services, and features that differentiate it from generic AMMs. Camelot is a solid, innovative project that may thrive as a niche player but will struggle to compete at the top tier of DEX volume and liquidity.