How is the exchange rate calculated in the pools?

The exchange rate is formed according to the formula X × Y = K, where:

X - the amount of one cryptocurrency in the pool;

Y - the amount of another cryptocurrency in the pool;

K - a constant.

Here's an example of how the rate is calculated in the pool (without considering fee):

In the USDT x MLNK pool before the exchange:

100 USDT x 135,000 MLNK = 13,500,000 – constant

The rate is 1 USDT = 1,350 MLNK

⚠️ If we exchange one cryptocurrency for another, we are essentially adding it to the pool and removing the other from the pool, and vice versa.

🔸 If I want to exchange 1 USDT

After the exchange, the pool will have:

(100+1 = 101 USDT) and (13,500,000/101 = 133,663.37 MLNK)

We check the constant:

101 USDT x 133,663.37 MLNK = 13,500,000 

The rate at which we exchanged 1 USDT = 1,336.63 MLNK

Therefore, now in the pool, the rate is 1 USDT = 133,663.37/101 = 1,323.40 MLNK

🔹 If I want to buy 1 USDT

After the exchange, the pool will have:

(100-1 = 99 USDT) and (13,500,000/99 = 136,363.64 MLNK)

We check the constant:

99 USDT x 136,363.64 MLNK = 13,500,000

The rate at which we bought 1 USDT = 1,363.64 MLNK

Therefore, now in the pool, the rate is 1 USDT = 136,363.64/99 = 1,377.41 MLNK

⚠️ The more cryptocurrency there is in the pool, the harder it is to shift its rate.

Skip to content