Starting with Protocol 18 and CAP-38, the Stellar network supports liquidity pools, allowing for the automatic creation of markets on the network.
Hello dear crypto community!
We are pleased to announce that we have released a powerful, simple and convenient interface for managing Stellar liquidity pools. Now you can participate in liquidity pools and earn with AMM in Scopuly.
Liquidity Pools
A liquidity pool is a trading pair of assets with locked funds from liquidity providers providing liquidity to the pair. When buying or selling a token through a liquidity pool, a trader leverages the pool’s locked funds. Unlike centralized exchanges with limit orders and order book, with liquidity pools there is no need to place an order and wait for it to be filled. Trading is conducted by an automated market maker (AMM).
AMM
AMM automatically calculates the price of a token in a trading pair by balancing the quantity of both tokens in that pair. Pool liquidity is provided by liquidity providers.
Liquidity Provider
In order for a trader to buy and sell tokens through a pool, there must be liquidity in that pool. It is provided by liquidity providers. Why should they do it? To get a share of the same 0.3% commission that a merchant pays for each transaction in the pool.
Add and remove liquidityAdding liquidity is all about bringing your own funds to the pool. Thanks to these tools, traders can make transactions, and AMM controls the ratio of coins in the pool and adjusts the price depending on the direction of the transaction (buy or sell). You can add liquidity to an existing pool (e.g. XLM/SCOP). Swimming pool). When adding liquidity, the coin ratio should always be 50%/50%. This is a basic rule that allows you to maintain the proportions of coins in the pool without affecting the price. That is, by adding liquidity, the provider increases the volume of the pool and liquidity, but does not affect the price.Creating a liquidity poolDon’t have a pool you want to add liquidity to? No problem, you can also create it with your own token and any other coins in the Stellar network, for example. After creating a pool, you can check it in Explorer using the pool’s hash or on the All Pools page (scopuly.com/pools), enter the name of the desired token in the search field.
To add liquidity to the pool (along with creating the pool) we get pool tokens. Once a pool is created, any other member of the Stellar network can become a liquidity provider in that pool.
When we exit the pool, in addition to our deposited funds, we receive a certain percentage of commissions upon withdrawal, equal to our share of the pool ownership, collected by the pool since the provider.
Diploma: The longer you keep liquidity in the pool, the more you earn. The pool is increased by commissions.
Since Scopuly is also a powerful block explorer for Stellar, below the charts you can see the whole history of the pool: effects, trades, transactions and operations and explore all this data in the most detailed way.
Thank you for reading this article to the end!
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