Liquidity Pools are part of the bitshares-core 5.0, which are providing a fully automated and autonomous onchain liquidity.
The exchange rate is defined by:
- constant product model:
k = amount_x * amount_y
- pool taker fees, contributed to the pool token holders
- asset fees, contributed to the asset owner
Both assets are needed in equal amounts at the current pool price. Liquidity Pools, which use a (Market Pegged Asset)/Collateral pair, can be used to stake a long, neutral or short position.
Example: 1.19.66 – HONEST.BTCBTSMM
- HONEST.BTC Long – BTS Short: Sell 50% of the BTS for the HONEST.BTC part.
- HONEST.BTC/BTS Neutral: Borrow the 50% HONEST.BTC and add an extra 50% BTS.
- HONEST.BTC Short – BTS Long: Use all BTS for borrowing. Sell 50% of your HONEST.BTC for the BTS part.
Withdrawing funds from the pool burns the pool token and reduces the pool token supply. Withdraw fees are shared to the remaining pool token holders.