QuickSwap, a fork of Uniswap V2, originally deployed on the Polygon blockchain, provides efficient and user-friendly liquidity pools.
Uniswap V2: Pioneering the AMM Landscape
Uniswap V2 is a cornerstone in the decentralized exchange (DEX) ecosystem, introducing the Constant Product Market Maker model, which revolutionized liquidity pool mechanics.
Technology Overview:
- Model: Uniswap V2 contracts operate on the Constant Product Market Maker formula ( x * y = k) where ( x ) and ( y ) are the reserve quantities of two tokens, and ( k ) is a constant ensuring liquidity across all price levels.
Liquidity Provision:
- Liquidity providers (LPs) deposit equal value of two ERC20 tokens into the pool.
- The initial provider determines the exchange rate by setting the first pair of token deposits.
- LPs receive liquidity tokens that represent their proportional ownership in the pool.
Fee Mechanism:
- A 0.3% trading fee is charged on every swap, distributed among LPs in proportion to their stake.
Key Innovations:
- Decentralized Liquidity Provision: Any user can add liquidity and earn fees without requiring permission.
- Price Stability and Arbitrage: Prices are adjusted dynamically by trades, promoting efficient market conditions.
- Oracles: Time-weighted average price (TWAP) oracles for secure off-chain integrations.