AUTOMATED MARKET MAKER
What is an automated market maker (AMM)?
An automated market maker (AMM) is a type of decentralized exchange (DEX) protocol that relies on a mathematical formula to price assets. Instead of using an order book like a traditional exchange, assets are priced according to a pricing algorithm.
This formula can vary with each protocol. For example, Uniswap uses x * y = k, where x is the amount of one token in the liquidity pool, and y is the amount of the other. In this formula, k is a fixed constant, meaning the pool’s total liquidity always has to remain the same. Other AMMs will use other formulas for the specific use cases they target. The similarity between all of them, however, is that they determine the prices algorithmically. If this is a bit confusing right now, don’t worry; hopefully, it’ll all come together in the end.
Traditional market making usually works with firms with vast resources and complex strategies. Market makers help you get a good price and tight bid-ask spread on an order book exchange like Binance. Automated market makers decentralize this process and let essentially anyone create a market on a blockchain. How exactly can they do that? Let’s read on.
Mechanism
How does an automated market maker (AMM) work?
An AMM works similarly to an order book exchange in that there are trading pairs – for example, ETH/DAI. However, you don’t need to have a counterparty (another trader) on the other side to make a trade. Instead, you interact with a smart contract that “makes” the market for you.
On a decentralized exchange like Binance DEX, trades happen directly between user wallets. If you sell BNB for BUSD on Binance DEX, there’s someone else on the other side of the trade buying BNB with their BUSD. We can call this a peer-to-peer (P2P) transaction.
In contrast, you could think of AMMs as peer-to-contract (P2C). There’s no need for counterparties in the traditional sense, as trades happen between users and contracts. Since there’s no order book, there are also no order types on an AMM. What price you get for an asset you want to buy or sell is determined by a formula instead. Although it’s worth noting that some future AMM designs may counteract this limitation.
So there’s no need for counterparties, but someone still has to create the market, right? Correct. The liquidity in the smart contract still has to be provided by users called liquidity providers (LPs).
WHY RUSHMOON?
RushMoon may be a new AMM but it has got some real good ammo in its locker. Check them out
Trading Incentive
Users can earn tokens by trading on RushMoon. But different from traditional trading mining, the rewards on RushMoon for trading can be different tokens. Other projects can provide their own tokens as rewards for specified trading pairs. More details about it will be published later.
Automatic Liquidity
Each transfer of RUSH must pay a 5% transfer tax. The 4% transfer tax gets added to the liquidity pool through the contract automatically to raise the price floor continuously. And the liquidity will be locked and inaccessible.
Automated Burning
About 1,000,000 tokens have already been burned. And more to follow in a few minutes!
Harvest Lockup
Harvest lockup is a unique rewards lockup mechanism used to limit the frequency of harvest. It is designed to prevent farming arbitrage bots from constantly harvesting and dumping.
Deposit Fee Redistribution
A 4% deposit fee will be charged when users enter staking on RushMoon, we plan to use the deposit fee to add more liquidity buy back pool. This provide instead of the removed liquidity of RUSH buyback pool.
BuyBack
Every time this function is called 2% of liquidity is removed and the liquidity is then split into BNB and RUSH. BNB market buys RUSH. The rest ~99% of the RUSH is then burned ~ 1% of RUSH sent to caller of the function to incentivize user spending gas.
Referral Program
An on-chain referral program has been implemented to incentivize users to invite friends to join the farming. Inviters can earn 1% of his/her friends' earnings forever.
Migrator Code erasure
To prevent rugpulls, the migrator code in the MasterChef contract has been removed from the contract.
Timelock
Timelock has been added at launch.
RUSHMOON RESOURCES
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ABOUT THE AUTHOR
Joseph Johns is a successful Emergency Medicine Physician and an ardent cryptocurrency and Blockchain connoisseur.
Bitcointalk Username: Jaered
Bitcointalk Profile: https://bitcointalk.org/index.php?action=profile;u=2809533
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