What is Newdex Swap?
Newdex Swap is the Decentralized Exchange that implements the market maker model of constant product on EOS chain.
- Users can quickly swap currencies. When the liquidity pool is large enough, the transaction price will be optimal.
- When the market maker deposits market-making fund into the liquidity pool, he can earn swap fee paid by user.
What is the liquidity pool?
Liquidity pool is the fund pool that Newdex Swap stores trading tokens.
What is the market maker?
Market maker is the investor who provides liquidity for the trading pair. By becoming a market maker, you can earn all transaction fees of the trading pair.
What is the certificate?
The certificate is the one used to withdraw the funds in the liquidity pool.
How to fix a price of Newdex Swap transaction price?
For example: current price of EOS swapping to NDX = NDX amount in liquidity pool / EOS amount in liquidity pool
Premium rate = (current price-estimated transaction price) / current price
Note: The current price is not the actual transaction price of the user. The actual transaction price depends on the actual amount in liquidity pool when the user initiates the transaction.
In the case of limited amount in liquidity pool, it is recommended that user swaps a small amount to avoid excessive premium rate.
About the deposit & withdrawal proportion of market-making fund
Deposit: Market maker must deposit the market-making fund according to the current fund ratio of the system.
If there are 1000 NDX and 10 EOS in the liquidity pool, the new market-making fund must be deposited at a ratio of 100NDX: 1EOS.
The deposit ratio is based on the real-time liquidity pool ratio. If a user deposits a market-making fund, but other users may complete a swap transaction when the user initiates the transfer, which changes the liquidity pool ratio, Newdex Swap will use the latest ratio to deposit the asset, and the excess asset will be refunded to the market maker. After depositing, the market maker will obtain the certificate of amount corresponding to the proportion of assets in the liquidity pool.
Withdrawal: Market maker can withdraw the corresponding proportion of principal and revenue in the liquidity pool by depositing certificate. The withdrawn certificate will be destroyed by the system.
The swap transaction charges 0.3% handling fee. The handling fee will be placed in the liquidity pool, and all will be owned by the market maker.
If the user selects the transit transaction, two handling fees will be charged.
There is no handling fee for market makers to deposit or withdraw market-making funds.