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HopiumSwap Exchange

HopiumSwap Exchange on the Polygon network, This is a fork of pancakeswap and we changed networks to Polygon to make every transaction cheaper for all our users. Our goal is the be the biggest and best swap echange on the polygon network once we are fully launched. We will have the most of same features and pancakeswap but on a cheaper network.๐Ÿš€๐Ÿš€๐Ÿš€๐Ÿš€

August 01, 2022 07:08

HopiumSwap is a protocol that facilitates the exchange of POLY ERC-20 tokens. Typically, centralized exchanges function by using an order-book where market participants post limit orders at which they are willing to buy and sell an asset, and market makers fill these orders with the intention of earning a return on the spread. HopiumSwap does away entirely with the order book and instead opts to have liquidity providers deposit assets into a pool that traders can then trade against. The price is determined algorithmically based on the proportion of the two assets being traded.


Price Mechanism HopiumSwap uses what's known as a Constant Product Market Maker that is designed to always provide liquidity regardless of the order size or amount of funds in the pool. This is achieved by asymptotically increasing the price as the size of the buy order increases, leading to potentially significant slippage on large orders. Trading pools consist of two tokens, with the product between the two sums remaining constant. Any given transaction increases one sum while decreasing the other and the price changes based on the ratio between the two.


Providing Liquidity When liquidity providers add to a pool, they receive newly minted liquidity provider (LP) tokens entitling them to their proportion of the total pool as well as the 0.17% fee generated off each trade. HopiumSwap Treasury receives the remaining 0.03% from the 0.20% charged on every trade. Liquidity tokens keep track of how much of the pool is owed. Liquidity providers need to supply both assets in the same proportion they are currently at, otherwise, they will change the ratio and thus price. This would result in the immediate loss of money as the price change should get arbitraged out by trading bots. Even if providers supply the correct ratio of each asset, large price changes can result in the loss of money, also known as impermanent loss. Therefore, providers are hoping for substantial volume of trading around the price they entered such that the fees generated account for any potential losses.