Soku Swap offers users multiple ways to make money. From providing liquidity to trading or using soft loans using term loans. Imagine arbitrating millions of dollars with Pancake Swap or Uniswap using our coins on our easy-to-use flash credit system. From below you can get to know about the liquidity pools of Soku Swap.
What is a liquidity pool in Soku Swap?
A liquidity pool is a collection of funds locked in a smart contract. Liquidity pools are used to facilitate decentralized trading, lending, and many more functions.
Liquidity pools are the backbone of many decentralized exchanges (DEX), such as Uniswap. Users called liquidity providers (LP) add an equal value of two tokens in a pool to create a market. In exchange for providing their funds, they earn trading fees from the trades that happen in their pool, proportional to their share of the total liquidity. As anyone can be a liquidity provider, AMMs have made market making more accessible. Automated market makers (AMM) have changed this game. They are a significant innovation that allows for on-chain trading without the need for an order book. As no direct counterparty is needed to execute trades, traders can get in and out of positions on token pairs that likely would be highly illiquid on order book exchanges.
Adding Liquidity
Adding liquidity involves putting an equivalent value of either ETH & ERC20 or BNB & BEP20 tokens into the related exchange contract. The first liquidity providers determine the initial exchange rate by depositing what they think is comparable to the coin and tokens value. If the initial rate is low, arbitrage traders will bring the rate to equilibrium at the initial providers' expense.
Removing Liquidity
Liquidity providers can opt to burn their liquidity tokens to withdraw their contributions in the pool. BNB withdrawal is calculated by
bnb Withdrawn=bnb Pool (amount Burned / total Amount)
Tokens Withdrawn=token Pool (amount Burned / total Amount)
BEP20 tokens and BNB tokens are withdrawn according to the market's prevailing rates, not the rates at the time of investment. This implies some value can be gained or lost due to fluctuations in the market and arbitrage. Fee taken on trades is added to liquidity pools without minting new liquidity tokens.
Liquidity Tokens
Soku Swap liquidity tokens (SOKU LP) represent the provider's contribution to the liquidity pool. They are ERC20 coins or BEP20 tokens, depending on which chain they provided liquidity on. These tokens allow liquidity providers to sell their liquidity or transfer them between accounts without impacting liquidity in pools. Liquidity tokens are minted and sent to the addresses of liquidity providers. They represent the providers' contribution to a pool. These tokens are highly divisible and can be burned at any time to return a proportional share of the market to the providers. Providers deposit into reserves and mint new liquidity tokens.
The BNB sent to the function determines the number of liquidity tokens minted. The formula below calculates minted tokens
amountMinted=totalAmount(bnbDeposited / bnbPool)
Depositing BNB into reserves calls for depositing an equivalent value of BEP20 tokens as well. Tokens deposited is calculated by the formula
tokensDeposited=tokenPool(bnbDeposited / bnbPool)
Liquidity Earnings
Soku Swap does not charge a platform fee. The trading fee is a low 0.2%, with 0.17% going to the liquidity providers and the remaining 0.03% going to the Soku Swap treasury, where a portion is used for the development, customer service, and user rewards. The swapping fee is immediately deposited into liquidity reserves.
Soku Swap uses a remarkable formula to ensure saves stay in relative equilibrium. Likewise, where do the stores come from? The stores are pooled among liquidity providers who supply the exchange with tokens as a trade-off for a bit of the trade cost. The stage, hence, utilizes library arrangements to work with the exchange between different money-related principles. Hope this can help you to understand about all the things of Soku Swap’s Liquidity.
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