What is an automated market maker? Automated market makers (AMMs) are a type of decentralized exchange (DEX) that use algorithmic “money robots” to make it easy for individual traders to buy and sell crypto assets. Instead of trading directly with other people as with a traditional order book, users trade directly through the AMM. Market makers are entities tasked with providing liquidity for a tradable asset on an exchange that may otherwise be illiquid. Market makers do this by buying and selling assets from their own accounts with the goal of making a profit, often from the spread—the gap between the highest buy offer and lowest sell offer. Their trading activity creates liquidity, lowering the price impact of larger trades. While other types of decentralized exchange (DEX) designs exist, AMM-based DEXs have become extremely popular, providing deep liquidity for a wide range of digital tokens.
When DeFi was built, most trading pairs were pools containing two tokens. That’s why in most AMMs, liquidity providers are required to deposit 2 tokens in a 50:50 value ratio to a liquidity pool. When the tokens change in price relative to one another, rebalancing causes the pool to sell the token that is rising in price, so you end up with less of the rising tokens and more of the falling tokens. i.e. legacy AMMs are selling tokens that perform better at a discount. Over time, this causes the cumulative value of your pooled tokens to be worth less than if you simply held the two assets in your wallet. Example: If you stake ETH and USDT in a pool to provide liquidity, and the price of ETH goes up, the pool will sell your ETH, and you will end up with more USDT than ETH.
Price impact is the difference between the market price and the estimated price that depends on trade size (how much the size of your trade will impact the liquidity pool). If the pool's total worth is $1000 and you are trading $100, that will "impact" the pool by 10%. The bigger the liquidity depth, the lower the price impact for a given trade size and the cheaper the trade.
Price slippage refers to the difference between the expected price before a transaction is executed and the actual price at which it is executed. Slippage happens because of the variables in the WhiteSwap formula. Every transaction changes the price slightly. The larger the transaction size of a token relative to its liquidity depth, the higher the price slippage. When you see the "price slippage" message, you are still able to proceed with your transaction. This is not an indication that may cause the transaction to fail in any way. If you just wish to convert tokens, you may proceed.
Simply create your liquidity pool using the WhiteSwap interface, define the initial price, set the liquidity reserves, and add your token to the token list.
Liquidity providers earn a 0.3% fee from every transaction facilitated with the liquidity pool. Trading fees are always auto-compounding for a depositor.
Network fees are related to the network itself and not WhiteSwap, so the cost of a failed transaction is unfortunately not refundable. The tokens you attempted to trade will remain in your wallet. The trade might have failed for a number of reasons: maximum slippage was reached before the transaction was finalized, you didn't have enough resources in your wallet, etc. You can change your slippage tolerance by pressing the settings button at the top right side.
Add liquidity into one of the selected pools and then add your LP tokens into the farming pool. As for the staking rewards, users have to manually restake them. Here’s how it works: - Сhoose a farming pool and provide liquidity into the selected pool; - Stake your LP tokens into the farming pool; - Earn your farming rewards and collect fees corresponding to your share in the pool.