MocktailSwap is the decentralized swap solution from Binance Smart Chain. We provide a platform for creating a fully secure and fast decentralized token exchange system. MocktailSwap Pools allows you to provide liquidity by adding your tokens to a liquidity pool or "LP".
A liquidity provider (LP) adds funds to the liquidity pool. You can think of a Liquid Pool as a large pile of money that can be exchanged with traders. In return for providing liquidity for the logs, LP gets a fee from the transactions that occur in their pool. In the case of Uniswap, LP deposits the equivalent of two tokens - for example 50% ETH and 50% DAI in the ETH / DAI pool.
Are you waiting for everyone to become a market maker? Is it right! It is very easy to add funds to the liquidity pool. Prices are determined by the protocol. For example, Uniswap v2 charges a fee of 0.3% for traders who immediately open LP. Other platforms or forks may charge less in order to attract more liquidity providers to their pool.
Why is it important to attract liquidity? Due to the way AMM works, the less liquidity there is in the pool, the less slippage that can lead to large orders. This, in turn, can attract more volume to the platform, etc.
Slip issues vary depending on AMM design but must be considered. Remember that prices are determined by an algorithm. It is easy to determine how much the ratio between tokens in the liquid pool will change after the transaction. If the ratio changes due to a large difference, a large slip occurs.
Suppose you want to buy all ETH in the ETH / DAI pool from Uniswap. You can't! You'll have to pay exponentially higher and higher premiums for each additional ether, but you can never buy the entire batch. Why? This is because the formula x * y = k. If x or y is zero, which means there is no ETH or DAI in the set, the equation no longer makes sense.
But that's not the full story of AMM and the liquidity pool. There is another thing you need to consider when providing liquidity to AMM - volatile losses.
Liquidity Pool and Adding Liquidity in MocktailSwap
When you add your tokens to the liquidity pool (LP), you will receive FLIP tokens (MocktailSwap's version of tokens from liquidity providers).
For example, if you deposit $ MOK and $ BNB in liquidity, you will receive FLIP MOK-BNB tokens.The number of FLIP tokens received corresponds to your share of the MOK-BNB liquidity pool. You can also redeem your money at any time by erasing your liquidity.
Providing liquidity is not without risk as you may face permanent losses. Simply put, volatile losses are the difference between storing tokens in AMM and storing them in your wallet. "- Nate Hindman
It's not all bad for liquidity providers as you also get a reward in the form of trading fees. When someone trades at MocktailSwap, the trader pays a fee of 0.2%, of which 0.17% is added to the liquidity pool of the swap pairs they have traded.
As an example:
• There are 10 FLIP tokens representing 10 MOK and 10 BNB tokens.
• 1 FLIP token = 1 MOK + 1 BNB
• Someone swaps 10 MOK for 10 BNB.
• The other person exchanges 10 BNB for 10 MOK.
• MOK / BNB liquidity pool now includes 10,017 MOK and 10,017 BNB.
• Each FLIP token now costs 1,00017 MOK + 1,00017 BNB.
To be more useful as a liquidity provider, you can also include your FLIP tokens by increasing profitability on the MOK farm while earning a reward of 0.17% of the trading fee.
The term liquidity is used to define the ability to sell or buy an asset without having a material impact on the market price. It also has to do with the idea of how easy it is to convert assets into fiat currency. Assets or assets that are difficult to convert into cash are not liquid, whereas those that can be immediately converted are considered liquid assets. And one can do transactions in MoctailSwap through liquidity pools.
For More Info, Visit Below Link
Website – https://www.mocktail.finance/, https://www.mocktailswap.finance/
Whitepaper – https://docs.mocktailswap.finance/
Telegram Group – https://t.me/MocktailSwap
Discord Official Server – https://discord.gg/cntAVTJbGy
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