Camelot DEX has established itself as a leading decentralized exchange natively built on Arbitrum, offering a unique twist on automated market making through its innovative spNFT (semi-permeable NFT) liquidity positions. In this comprehensive 2026 review, we dive deep into how Camelot works, how its spNFT mechanism differs from traditional LP tokens, what real yields look like after fees and incentives, and whether the platform's sustainability holds up against competitors like Uniswap and Curve.
Whether you're an experienced DeFi farmer or just exploring Arbitrum-native protocols, this guide will help you understand the mechanics, risks, and profit potential of providing liquidity on Camelot.
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📋 Table of Contents
- 1. What Is Camelot DEX?
- 2. spNFT Liquidity Positions Explained
- 3. Fee Structure & Reward Distribution
- 4. Real Earnings: Fees vs Token Incentives
- 5. GRAIL & xGRAIL Tokenomics
- 6. Risks: Impermanent Loss, Smart Contracts & Audits
- 7. Step-by-Step: Providing Liquidity on Camelot
- 8. Camelot vs Uniswap vs Curve on Arbitrum
- 9. Frequently Asked Questions
What Is Camelot DEX?
Camelot is a decentralized exchange (DEX) built from the ground up on Arbitrum, designed to be a capital-efficient and community-centric ecosystem. Unlike general-purpose AMMs, Camelot focuses on providing deep liquidity for Arbitrum-native projects through its innovative "spNFT" model and customizable fee structures.
💡 Key Differentiators:
- Native to Arbitrum: Optimized for low gas costs and fast finality.
- spNFT Liquidity Positions: LPs receive a semi-permeable NFT representing their concentrated liquidity range, which can be traded or used in other protocols.
- Dynamic Fees: Pools can have custom fee tiers set by projects, enabling better alignment with trading volume.
- xGRAIL Boost: Stake GRAIL to receive xGRAIL and boost your farmed rewards.
Camelot launched in late 2022 and has steadily grown to become one of the top DEXes on Arbitrum by total value locked (TVL), with over $200 million in liquidity as of early 2026. Its focus on composability and partnerships with major Arbitrum protocols makes it a cornerstone of the ecosystem.
spNFT Liquidity Positions Explained
Instead of the typical ERC-20 LP token, Camelot issues liquidity positions as semi-permeable NFTs (spNFTs). Each spNFT represents a unique range of liquidity you've provided to a specific pool, along with your share of fees and any farmed rewards.
How an spNFT Works
Each spNFT contains your position's metadata, range, fees earned, and reward allocations.
Key Features of spNFTs
- Customizable Range: Like Uniswap V3, you can concentrate liquidity within a specific price range to earn higher fees.
- Dynamic Fee Accrual: Trading fees accumulate directly inside the NFT and can be claimed at any time.
- Reward Boosting: If you stake your spNFT in a farm, you earn GRAIL token incentives, with boosts based on your xGRAIL balance.
- Transferability: spNFTs can be transferred or sold on NFT marketplaces, allowing you to exit a position without removing liquidity (though the buyer takes over the range).
🔄 Range Width Strategy
Narrow ranges earn higher fees per swap but require more frequent rebalancing if price moves. Wide ranges reduce impermanent loss but earn lower fees. Camelot's analytics dashboard shows volume distribution per pool to help you choose an optimal range.
Fee Structure & Reward Distribution
Camelot offers flexible fee tiers per pool: typically 0.01%, 0.05%, 0.30%, and 1.00%. Projects can choose the tier that best suits their token's trading profile. 100% of swap fees go to LPs in that pool (no protocol fee).
Reward Farms
Many pools also offer additional GRAIL token rewards through farms. When you stake your spNFT in a farm, you earn GRAIL emissions distributed per block. Your share of rewards depends on your liquidity amount and any xGRAIL boost you have.
| Pool Type | Typical Fee Tier | Base APY from Fees | GRAIL Boost APY | Total Estimated APY |
|---|---|---|---|---|
| Stable Pools (USDC/USDT) | 0.01% | 2-5% | 5-15% | 7-20% |
| ETH/WETH Pools | 0.05% | 5-12% | 10-25% | 15-35% |
| Volatile Pairs (ARB/GRAIL) | 0.30% | 10-25% | 20-50% | 30-70% |
| Exotic Pairs (new projects) | 1.00% | 15-40% | 30-100%+ | 45-140%+ |
⚠️ Note on Boosted APYs
Boosted APYs are highly dependent on GRAIL price volatility and emission rates. Always calculate your expected yield based on current token prices and farm TVL; historical APYs are not a guarantee of future returns.
Real Earnings: Fees vs Token Incentives
To understand whether Camelot's yields are sustainable, we need to separate fee revenue from token incentives. Fee revenue comes from actual trading activity and is less prone to inflation. Token incentives are funded by GRAIL emissions and can be diluted if not offset by protocol growth.
Stable Pool Example (USDC/USDT)
Low VolatilityIn a stable pool with 0.01% fee tier and $10M TVL, daily trading volume averages $50M. Daily fees = $5,000. Distributed evenly among LPs, that's 0.05% daily return (~18.25% APY). GRAIL rewards add another 10% APY, but the majority of yield comes from fees.
Volatile Pool Example (ARB/GRAIL)
High VolatilityA volatile pool with 0.3% fee tier and $5M TVL sees $15M daily volume. Fees = $45,000/day → 0.9% daily return (~328% APY). GRAIL incentives add another 100% APY, making the total appear extremely high. However, volume is often driven by speculative trading and may not be sustainable. If volume drops, fee APY plummets, leaving only token incentives.
The key takeaway: focus on fee-generating potential first. Pools with consistent volume (like stablecoins or major pairs) provide more reliable base yield, while token incentives can amplify returns but carry inflation risk.
GRAIL & xGRAIL Tokenomics
GRAIL is Camelot's native governance and utility token. Total supply is capped at 100,000 tokens, making it highly deflationary compared to most DEX tokens. Emissions are distributed primarily to LPs and ve(3,3) style voters.
xGRAIL — Boosted Rewards & Governance
Staking GRAIL for xGRAIL (vote-escrowed model) gives you:
- Voting Power: Direct GRAIL emissions to pools you want to support (similar to Curve's gauge system).
- Boosted Farm Yields: Up to 2.5x multiplier on your staked spNFT rewards.
- Protocol Fees: A portion of swap fees is distributed to xGRAIL holders.
📊 Emission Schedule (as of 2026)
GRAIL emissions follow a declining schedule, with ~50% of total supply already distributed. Current daily emissions are ~150 GRAIL, down from 500 at launch. This controlled supply helps mitigate inflationary pressure on yields.
Risks: Impermanent Loss, Smart Contracts & Audits
⚠️ Critical Risks to Consider
- Impermanent Loss (IL): Concentrated liquidity positions amplify IL if the price moves outside your range. Stable pairs have minimal IL, but volatile pairs can suffer significant IL that outweighs fee income.
- Smart Contract Risk: Camelot has undergone multiple audits (by Hacken, ABDK, and others) but no code is 100% bug-free. Always assess the audit history and bug bounty programs.
- GRAIL Price Risk: If GRAIL price drops, your boosted rewards may not compensate for IL or impermanent loss.
- Liquidity Fragmentation: With many pools, liquidity can be thin, leading to higher slippage and lower fee capture.
As of early 2026, Camelot has no major incident history. The team is doxxed and active in the community, which adds a layer of accountability.
Step-by-Step: Providing Liquidity on Camelot
Connect Wallet & Bridge Funds
Use Arbitrum-compatible wallet (MetaMask, Rabby) and bridge ETH or tokens to Arbitrum via Arbitrum Bridge or Stargate.
Choose a Pool
Visit app.camelot.exchange. Browse pools by category: stable, major, volatile, or new projects. Check volume, fees, and farm APYs.
Select Range & Deposit
For concentrated pools, choose a price range. Use the built-in chart to see where most volume occurs. Deposit the two assets.
Receive spNFT
Your position is minted as an spNFT. You can view it in the "My Positions" section.
Stake to Farm (Optional)
To earn GRAIL rewards, stake your spNFT in the corresponding farm. If you hold xGRAIL, you'll get a boost.
Monitor & Rebalance
Check your position regularly. If the price moves out of range, you stop earning fees. You may need to withdraw and redeposit with a new range.
Camelot vs Uniswap vs Curve on Arbitrum
| Feature | Camelot | Uniswap (Arbitrum) | Curve (Arbitrum) |
|---|---|---|---|
| Liquidity Position | spNFT (concentrated) | ERC-20 or NFT (V3) | ERC-20 LP tokens |
| Fee Tiers | Customizable per pool | Fixed set (0.05%, 0.3%, 1%) | Fixed per pool type |
| Incentive Model | GRAIL emissions + boosts | No native token on Arbitrum; third-party incentives possible | CRV emissions via gauge votes |
| Best for | Arbitrum-native projects, flexible LPs | General trading, wide adoption | Stablecoin swaps, low slippage |
| TVL (Arbitrum) | $220M | $350M | $180M |
Camelot offers a more tailored experience for Arbitrum-native projects, while Uniswap dominates general trading and Curve rules stablecoin efficiency. Your choice depends on your risk appetite and which tokens you want to support.
Frequently Asked Questions
spNFT stands for "semi-permeable NFT". It's Camelot's representation of a liquidity position, containing metadata about the price range, accumulated fees, and any farmed rewards. Unlike standard LP tokens, spNFTs are non-fungible, meaning each position is unique.
Fees accumulate automatically in your spNFT. To claim them, go to the "My Positions" page, select your spNFT, and click "Claim Fees". Fees are added to your wallet in the underlying tokens.
Yes, spNFTs are transferable. You can list them on NFT marketplaces like OpenSea (Arbitrum). However, the buyer will inherit the liquidity position, including any fees accrued but not claimed. Make sure to consider tax implications.
xGRAIL is obtained by staking GRAIL tokens for a chosen lock period (up to 1 year). xGRAIL gives you voting power to direct GRAIL emissions and boosts your farm rewards up to 2.5x. It also earns a share of protocol fees.
Yes, Camelot has been audited by multiple firms including Hacken, ABDK, and Zokyo. All audit reports are publicly available on their documentation site. The protocol also maintains a bug bounty program.
Impermanent loss mechanics are identical because both use concentrated liquidity. However, Camelot's range selection tools and fee distribution may help you better optimize your range. The risk remains proportional to how narrow your range is and the volatility of the pair.
Final Verdict: Is Camelot Worth It in 2026?
Camelot has carved out a strong niche on Arbitrum by offering flexible, project-friendly liquidity solutions and a deflationary token model. Its spNFT system is a powerful innovation, giving LPs granular control and the ability to trade positions. The real earning potential depends heavily on pool selection: stable pairs offer modest but sustainable returns, while volatile pairs can spike but carry higher IL and inflation risk.
For DeFi enthusiasts already active on Arbitrum, Camelot is a must-explore protocol. Its integration with major projects and the ability to boost yields with xGRAIL make it a compelling addition to any diversified liquidity strategy. Just remember to do your own research on each pool's volume, fee potential, and the project behind it.
🚀 Ready to dive deeper?
Check out our related guides on Arbitrum vs Optimism gas fees and Uniswap vs Curve stable pairs to refine your Arbitrum DeFi strategy.