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Gate.io will Upgrade Certain Markets to Automated Market Maker (AMM) Mode (Add 50% Transaction Fee as Bonus)
Gate.io will Upgrade Certain Markets to Automated Market Maker (AMM) Mode (Add 50% Transaction Fee as Bonus)
2021-07-28 11:34:00 UTC
100064 Read
Since its inception, Gate.io has launched more than 1,000 trading pairs, making it the world's largest exchange for crypto coins. It was recently ranked #1 for Altcoins by Coin Clarity and was called a “Altcoin Hunter's Dream”.
Gate.io has always been on a mission to add benefits for platform users. Over time, we have found that most of the new and non-mainstream coin markets have limited liquidity, poor market depth, and other problems that lead to high slippage (the direct difference between the expected price of a trade and the price at which the trade is uted) for large transactions.
The Uniswap project which sparked DeFi's popularity offers a very good solution - the Automated Market Maker (AMM) mechanism. As Uniswap is built on a decentralized network with high requirements for personal security, the network charges a high Gas fee for each transaction. This limits participation and the user experience.
To further enhance the user experience, Gate.io has officially launched the centralized Automated Market Maker (AMM) service. This allows most of the new and non-mainstream coin markets to gain similar liquidity as Uniswap. It allows users to enjoy a low-cost and high-quality user experience on a centralized platform.
The rules for markets to upgrade to the Automated Market Maker (AMM) model are as follows:
1) Fixed 0.3% commission fee for both Taker and Maker (temporarily consistent with Uniswap, subject to the needs of both market parties)
2) A fixed percentage (such as 50%) of the transaction fee will automatically be changed into GT through the open market and put into the AMM Reward Pool.
3) Anyone can become a liquidity provider (LP) and get the transaction fee rewards from the liquidity pool and the GT rewards that are invested in the liquidity bonus pool.
4) Liquidity providers provide liquidity to the market, but they need to bear in mind the risk of impermanent losses. For example, if the market price doubles, the impermanence loss is about 7%, and if the market price drops back to the original point, the impermanence loss disappears.
5) Liquidity providers can take bonus and withdraw at any time
Additional Reading:
What is the Automated Market Maker (AMM) mechanism?
Through the automated market maker mechanism, the liquidity provider (LP) can earn trading fee revenue by providing liquidity to the market. The order takers offer fees to the LP in exchange for lower slippage. Through this mechanism, the market needs of both parties are well matched, allowing LPs and takers to get what they want.
What is an impermanent loss?
It refers to the loss of capital due to spreads that occur when the price of a digital asset changes after an investor has deposited in the automated market maker liquidity pool. Irrespective of how the price of the digital asset changes, inpermanent loss will occur and the larger the spreads, the larger the loss.
What is liquidity mining?
Liquidity mining is a method of acquiring more cryptocurrencies by pledging cryptocurrency. It is a new trend in decentralized finance (DeFi) that allows cryptocurrency investors to fully utilize their crypto assets and receive higher returns. Anyone can participate in the eco. Simply put, this means locking in cryptocurrencies to receive rewards.
What are the benefits of providing liquidity?
Users can earn market making dividends by adding liquidity to the market. By adding liquidity, funds are injected into the pool, and the fee revenue earned from automatic market making in the pool is distributed to the liquidity provider in proportion to their share of the pool. Liquidity can be accessed in real time without any commission charges.
Science: From Market Maker to Liquidity Mining, How Important is Liquidity?
Why is Gate.io Liquidity Mining Great for Low Volatility?
Science: What You Need to Know About Investments in Liquidity Mining Products
Gate.io has always been on a mission to add benefits for platform users. Over time, we have found that most of the new and non-mainstream coin markets have limited liquidity, poor market depth, and other problems that lead to high slippage (the direct difference between the expected price of a trade and the price at which the trade is uted) for large transactions.
The Uniswap project which sparked DeFi's popularity offers a very good solution - the Automated Market Maker (AMM) mechanism. As Uniswap is built on a decentralized network with high requirements for personal security, the network charges a high Gas fee for each transaction. This limits participation and the user experience.
To further enhance the user experience, Gate.io has officially launched the centralized Automated Market Maker (AMM) service. This allows most of the new and non-mainstream coin markets to gain similar liquidity as Uniswap. It allows users to enjoy a low-cost and high-quality user experience on a centralized platform.
The rules for markets to upgrade to the Automated Market Maker (AMM) model are as follows:
1) Fixed 0.3% commission fee for both Taker and Maker (temporarily consistent with Uniswap, subject to the needs of both market parties)
2) A fixed percentage (such as 50%) of the transaction fee will automatically be changed into GT through the open market and put into the AMM Reward Pool.
3) Anyone can become a liquidity provider (LP) and get the transaction fee rewards from the liquidity pool and the GT rewards that are invested in the liquidity bonus pool.
4) Liquidity providers provide liquidity to the market, but they need to bear in mind the risk of impermanent losses. For example, if the market price doubles, the impermanence loss is about 7%, and if the market price drops back to the original point, the impermanence loss disappears.
5) Liquidity providers can take bonus and withdraw at any time
Additional Reading:
What is the Automated Market Maker (AMM) mechanism?
Through the automated market maker mechanism, the liquidity provider (LP) can earn trading fee revenue by providing liquidity to the market. The order takers offer fees to the LP in exchange for lower slippage. Through this mechanism, the market needs of both parties are well matched, allowing LPs and takers to get what they want.
What is an impermanent loss?
It refers to the loss of capital due to spreads that occur when the price of a digital asset changes after an investor has deposited in the automated market maker liquidity pool. Irrespective of how the price of the digital asset changes, inpermanent loss will occur and the larger the spreads, the larger the loss.
What is liquidity mining?
Liquidity mining is a method of acquiring more cryptocurrencies by pledging cryptocurrency. It is a new trend in decentralized finance (DeFi) that allows cryptocurrency investors to fully utilize their crypto assets and receive higher returns. Anyone can participate in the eco. Simply put, this means locking in cryptocurrencies to receive rewards.
What are the benefits of providing liquidity?
Users can earn market making dividends by adding liquidity to the market. By adding liquidity, funds are injected into the pool, and the fee revenue earned from automatic market making in the pool is distributed to the liquidity provider in proportion to their share of the pool. Liquidity can be accessed in real time without any commission charges.
Science: From Market Maker to Liquidity Mining, How Important is Liquidity?
Why is Gate.io Liquidity Mining Great for Low Volatility?
Science: What You Need to Know About Investments in Liquidity Mining Products
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Gate.io Team
July 30, 2021
