Liquidity Pools on ETC Swap
Traders interact with a liquidity pool when trading on an AMM exchange such as Uniswap. When a trader executes a trade, the smart contract sends his/her funds to the liquidity pool. It then calculates the corresponding amount of the other asset and sends it back to the trader.
The trade is calculated using the formula X*Y=K, where X and Y are the amounts of each asset and K is a predefined constant.
Each trade has a slippage, which increases with large trades. At the same time, users can become liquidity providers.
Last modified 7mo ago