3.3 Swap
The Swap feature is a core function of the Omura platform designed to facilitate the smooth trading of FPTs. Utilising the Automated Market Maker (AMM) model, users can benefit from more efficient and equitable transactions.
How Swap Works
Users can exchange tokens, such as FPTs and ADA, via the Swap interface. The Swap feature uses an AMM protocol to remove the necessity for traditional market makers or order books, bolstering liquidity and fair pricing.
When users input the desired tokens to swap, the AMM calculated the exchange rate based on the liquidity pool's current ratios and the trade amount. This pricing mechanism guarantees users a fair rate by adapting to changes in market supply and demand.
AMM and Liquidity Pools
Liquidity pools are at the heart the Swap function and maintained by the AMM. Users can contribute to the market's liquidity, and become liquidity providers (LPs) by depositing tokens into these pools. LPs earn a percentage of the transaction fees from these pools, relative to their share of the pool, in exchange for providing liquidity.
The AMM's design allows for instant trade execution at clear, direct prices, ensuring constant liquidity and minimal price slippage.
The Swap feature serves as a vital tool for token conversions and trading. By leveraging AMM technology, Omura presents a decentralized, streamlined, and accessible trading platform, further broadening the reach and utility of NFTs.
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