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AMM, Shares and Revenue Formula Explained

2020-09-04 08:29
AMM (Automated Market Maker) Formula:
ALeverage factor used to smooth the function curve
DThe immutable constant in the transaction process, the increase in transaction fees and liquidity will make it larger
nTypes of assets in the liquidity pool
xiThe i-th asset
wiThe value weight of assets in the liquidity pool (calculated with relative prices and normalized)of the i-th asset, preset parameters, default equal weights, wi=1/n
Liquidity Pool Share Calculation Formula:
Shares obtained by adding liquidity = total system issued shares * (user mortgage assets / total liquidity pool)
Revenue Calculation Formula:
Liquidity provider revenue: Part of the transaction fee income of the Swap & Liquidity Pool + Binance Savings Interest
The swap & pool fee income portion will enter the liquidity pool in real-time after each transaction is completed.
The savings interest portion will be calculated on the second day after the liquidity is added, and will be added to the liquidity pool. Users will be able to obtain their savings interest when removing shares from the pool.
Fees:
Each transaction in the exchange pool will incur a corresponding fee. At the same time, when adding to and removing from the exchange pool, if a transaction occurs (when adding assets, the system will split into two assets proportionally; removing assets, if you choose to redeem in a single coin), will incur a fee.
Reminder:
If operating add/remove too frequently, factors such as transaction fees, price fluctuations, slippage, and constant function leverage may cause the value of shares to wear.