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Understanding the concept of Metaverse
Liquidity pools vs. order books
- The order book is a collection of the currently open orders for a given market.
- The system that matches orders with each other is called the matching engine. Along with the matching engine, the order book is the core of any centralized exchange (CEX). This model is great for facilitating efficient exchange and allowed the creation of complex financial markets.
- Each interaction with the order book requires gas fees, which makes it much more expensive to execute trades.
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How do liquidity pools work?
Automated market makers (AMM) have changed this game. As no direct counterparty is needed to execute trades, traders can get in and out of positions on token pairs that likely would be highly illiquid on order book exchanges.
When you’re executing a trade on an AMM, you don...
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What are liquidity pools used for?
Pooling liquidity is a profoundly simple concept, so it can be used in a number of different ways.
- One of these is yield farming or liquidity mining. Liquidity mining has been one of the more successful approaches. The tokens are distributed algorithmically to ...
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What is a liquidity pool?
A liquidity pool is a collection of funds locked in a smart contract. Liquidity pools are used to facilitate decentralized trading, lending and many more functions.
- Liquidity Pools are the game-changing innovation in Decentralized Finance (DeFi) that facilitates tradin...
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The risks of liquidity pools
- If you provide liquidity to an AMM, you’ll need to be aware of a concept called impermanent loss. In short, it’s a loss in dollar value compared to HODLing. If you’re providing liquidity to an AMM, you’re probably ex...
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Dexalot is the first on-chain central limit order book DEX is about to launch on Avalanche offering the functionality, speed and user-friendly interface of centralized exchanges b...
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