Continuous Liquidity Pools

The algorithm for processing assets swaps is given by: y = (x * Y * X) / (x + X)^2, where x = input, X = Input Asset, Y = Output Asset, y = output

The fee paid by the trader is given by: fee = ( x^2 * Y ) / ( x + X )^2

The slip-based fee model has the following benefits:

  • Resistant to manipulation

  • A proxy for demand of liquidity

  • Asymptotes to zero over time, ensuring pool prices match reference prices

  • Prevents Impermanent Loss to liquidity providers

Staking The stake units awarded to a liquidity provider is given by: stakeUnits = ((R + T) * (r * T + R * t))/(4 * R * T), where r = SXP Staked, R = SXP Balance, T = Token Balance, t = Token Staked

This allows them to stake asymmetrically since it has no opinion on price.