CLOAK Hybrid DEX on Telos: How It Works and Why the CLOAK\/TLOS Launch Matters

Key Highlights

• CLOAK Hybrid DEX is now live on Telos mainnet with its first trading pair, CLOAK/TLOS.

• The protocol introduces a different model from traditional DEXs: order book trading and automated liquidity coexist within a single market.

• Liquidity is not fragmented across separate systems. The execution engine always searches for the best available price in real time.

• Constant product liquidity and concentrated liquidity are not separate pools. Instead, they are part of a unified liquidity curve.

• Privacy is not an external add-on. Thanks to the CLOAK Shielded Protocol, orders, trades, liquidity positions, and fee claims can also be private.

• The DEX runs fully on-chain on Telos, leveraging the key strengths of Antelope-based blockchains: fast finality, low fees, and deterministic execution.

Over the years, DeFi has produced a long list of decentralized exchanges, but most of them still preserve the same fundamental separation: order books on one side and AMMs on the other, with liquidity often spread across different mechanisms. The result is familiar: fragmentation, inefficiencies, and the need for users to adapt to the protocol’s structure rather than simply trading.

With the launch of CLOAK Hybrid DEX on Telos mainnet, CLOAK is trying to change that direction. The first CLOAK/TLOS market is now live, bringing with it an architecture that does more than improve the interface or offer another minor DEX variation. Its ambition is broader: to unify order books and automated liquidity into a single market.

CLOAK Hybrid DEX is a decentralized exchange that combines two models that are usually kept separate:

In most DeFi platforms, these two systems may coexist, but they do not truly integrate. They usually live in different sections of the platform, require different routing logic, and ultimately divide available liquidity.

CLOAK takes a different approach: one market, one price, and no artificial fragmentation.

The core idea behind CLOAK’s design is simple, but its implications are powerful: traders no longer need to choose how to execute between a book and a pool. The system evaluates available liquidity in real time and routes execution wherever the best price exists.

In practical terms, when a trade arrives:

For users, this reduces operational complexity. There is no need to manually decide between different trading modes or worry about where liquidity is located. The exchange behaves as a unified environment focused on best execution.

One of the most interesting aspects of the CLOAK model is that constant product liquidity and concentrated liquidity are not treated as two separate and independent pools. Instead, they are combined into a single price curve.

This means:

From a trader’s perspective, this behaves like a single pool, but with stronger liquidity characteristics than a traditional AMM and a more refined pricing dynamic.

In a traditional order book, there is usually a gap between the best bid and the best ask. That gap is where the spread lives. In the CLOAK model, AMM liquidity can sit continuously between those levels, reducing or even removing the empty space that often remains open in other markets.

The result is a system where:

This matters because it addresses one of DeFi’s oldest problems: markets that appear liquid on paper but become inefficient when traders actually need to execute.

The market did not launch from zero. CLOAK introduced a liquidity bootstrap mechanism directly tied to its recent token auction.

According to the launch model described by the project, around 15% of the TLOS proceeds from the auction were allocated to creating the initial liquidity in the constant product pool. This gave the market three essential advantages from day one:

For any newly launched market, this is critical. One of the biggest weaknesses of fresh trading pairs is poor initial liquidity, which can lead to heavy slippage, high volatility, and a fragile user experience. CLOAK aims to solve that issue at launch.

The fee structure also follows a straightforward logic:

This structure remains consistent whether execution happens through the order book or the pool. In other words, users who bring liquidity to the system, whether through limit orders or AMM positions, are directly incentivized, while the protocol maintains a sustainable economic base.

That may sound like a small detail, but it matters. Many DeFi protocols eventually develop fee systems that become overly complex, opaque, or difficult to understand. Here, the goal is to keep the relationship between users, liquidity providers, and the protocol as clear as possible.

If the hybrid liquidity model is the technical core of the DEX, the real distinguishing feature of CLOAK is its integration with the CLOAK Shielded Protocol.

This means the exchange does not only offer a standard transparent DeFi experience, but also allows users to interact with the platform in shielded mode through the CLOAK Wallet. Users can therefore choose between:

Privacy does not stop at transfers. In the protocol’s design, it extends across the DEX workflow, including:

In other words, privacy is not an accessory layered on top of the DEX. It is a native capability of the infrastructure.

This could have major implications for the evolution of DeFi on Antelope. In an ecosystem where most on-chain activity is publicly visible, the ability to protect trading strategies, liquidity positions, and execution flows could represent a meaningful shift.

The DEX runs entirely on-chain on Telos, with possible expansion to other EOSIO/Antelope-based blockchains in the future. That brings several well-known technical advantages:

The architecture also avoids opaque external components. There are no off-chain matching engines, no relayers, and no hidden execution layers. Everything happens inside the smart contract, fully on-chain, either transparently or privately depending on the user’s chosen mode.

For anyone closely following decentralized exchange development, this is a crucial point. Many platforms claim decentralization while still relying on off-chain infrastructure for key parts of execution. CLOAK’s promise, by contrast, is a trading infrastructure that remains consistently on-chain.

The launch of the CLOAK/TLOS market should not be seen as just another pair going live. It is the first real mainnet test of a model that tries to rethink some of DeFi’s core assumptions:

If the system continues to perform as expected as new markets, more volume, and additional liquidity arrive, it could become one of the most interesting decentralized exchange implementations built on Antelope infrastructure.

Anyone who wants to test the platform directly can access the CLOAK Hybrid DEX here:

app.cloak.today/en/advanced?network=telos-mainnet

From there, users can:

CLOAK is not simply launching another DEX. It is trying to demonstrate that a decentralized exchange can be designed so that order flow, capital efficiency, liquidity depth, and privacy do not have to conflict with one another.

The debut of the CLOAK/TLOS pair on Telos mainnet is only the first step, but it already makes the project’s direction clear: a single market, intelligent execution, non-fragmented liquidity, and privacy integrated from the ground up.

For an ecosystem that has often had to choose between total transparency, technical efficiency, and real usability, CLOAK’s approach may point toward a different path. And if it works at scale, it may prove to be a much more compelling one.