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An automated market maker (AMM) is a type of decentralized exchange (DEX) that depends on a mathematical formula to price assets. AMM does not use an order book like a traditional exchange, instead assets are priced according to a pricing algorithm. Veneraswap allows users to trade without going through Centralized Exchanges (CEX). All trades are done through your own wallet. No third party involved.
Liquidity Pools
What is a Liquidity Pool? Well Veneraswap operates when the liquidity is enough, a liquidity pool is a group of funds deposited into a smart contract by liquidity providers. When you trade on an AMM, you don’t have a counter party like in CEXs. However, you’re executing the trade against the liquidity in the liquidity pool. For the buyer to buy, there doesn’t need to be a seller at that particular moment, only sufficient liquidity in the pool. Providing liquidity will get you LP Tokens, which will earn you rewards in the form of trading fees for making sure there's always liquidity for the exchange to use.
Yield farming lets users that are providing liquidity earn VSW rewards by locking their LP tokens into a smart contract.
Last modified 1yr ago