Position Exchange

What is AMM?
Automated Market Maker (AMM) is the underlying protocol used by decentralized exchanges with an autonomous trading mechanism. This eliminates the need for centralized authorities like exchanges and other financial entities. Put simply, it allows two users to transact their assets without any intermediary facilitating the exchange.
<h2 id="header-0">Why does AMM play an important role on DEXs?</h2>
AMM helps set up a system of liquidity where anyone can contribute to it. This removes any intermediary lowering transaction fees for investors. High liquidity is essential for healthy trading activity. If there is less liquidity, it could cause slippage. Low liquidity introduces high volatility in the prices of assets in the market.
AMM also allows anyone to become a liquidity provider, which comes with incentives. Liquidity providers get a fraction of the fees paid on transactions executed on the pool.
<h2 id="header-1">How do smart contracts</h2>
When trading on an AMM, users interact with a liquidity pool. When a user requests a conversion from one cryptocurrency to another, a mathematical formula is automatically run to determine the value of tokens that the user may receive from time to time in terms of quantity and price.
The simplest formula is X x Y = K.
In which:
X and Y are the number of Tokens in the pool
K is a given constant that remains unchanged.
This equation will take the form of a hyperbola: a phenotype asymptotic to both infinity and zero at the extremes.
Each trade will have a certain slippage - the degree of mutual influence between the order size and the last price executed. This type of hyperbole has lesser slippage on small orders, but the slippage increases dramatically as the order size grows larger. Uniswap has always used this formula, but other platforms may use more complex algorithms to actively adjust for slippage.
<h2 id="header-2">AMM on Position Exchange</h2>
<a href="https://position.exchange/" rel="noopener noreferrer nofollow">Position Exchange</a> is an EVM decentralized exchange that uses AMM and Orderbook models combinably. This combination helps to lower slippage and bring better prices to users, thus helping you gain more profit.
Features of DEX Ver 2.0
<ul>
 <li>Lower slippage than traditional AMM DEX</li>
 <li>Higher liquidity than traditional AMM DEX</li>
 <li>Limit orders can be placed On-Chain</li>
 <li>Restrict Sandwich Attack. A sandwich attack is a type of front-running attack. It is applied over transactions sent to a decentralized exchange to buy tokens</li>
</ul>
<h2 id="header-3">How to use AMM on Position Exchange?</h2>
It takes just a few steps to become a liquidity provider on Position Exchange.
Step 1: Access <a href="https://position.exchange/" rel="noopener noreferrer nofollow">Position Exchange</a> and connect your wallet
<img src="https://academy-public.coinmarketcap.com/optimized-uploads/e24766d23c234bc8b299cc61ef6e850c.png">
Step 2: Visit the <a href="https://position.exchange/liquidity" rel="noopener noreferrer nofollow">Liquidity</a> section
<img src="https://academy-public.coinmarketcap.com/optimized-uploads/c8a8b30f8f0e4e1498cfcab6e06ea237.png">
You can view and add liquidity into some common pairs. Each pair goes with its APR and your staked amount.
Step 3: Choose pair and add liquidity
<img src="https://academy-public.coinmarketcap.com/optimized-uploads/cbea3d8d302240dcbefa5a28490ed6e8.png"><img src="https://academy-public.coinmarketcap.com/optimized-uploads/5e790e2410fb4e30b43823fe64d6db3b.png">
Choose a pair you want to add liquidity into.
Click [Add more] with the pair you staked before or [Add Liquidity] with the new pair
<img src="https://academy-public.coinmarketcap.com/optimized-uploads/bed544a128634403ba47761c6e32b59a.png">
If you prefer another pair besides those listed ones, you can select another coin in the dropdown tab on the right of the [Amount] text box.
<img src="https://academy-public.coinmarketcap.com/optimized-uploads/82bcdb34556e4c41a67678211ad091e2.png">
Click [Add Token] to finish choosing.
Step 4: Enter the amount
Enter an amount on either of the two tokens. The other will be calculated automatically.
<img src="https://academy-public.coinmarketcap.com/optimized-uploads/895b392dd07147f79f2b564f6ebf73f4.png">
If the amount you add overwhelms your balance, the system will disable the [Supply] button and notice you [Insufficient _ balance] instead. Please try with a lower amount to continue.
<img src="https://academy-public.coinmarketcap.com/optimized-uploads/ba81f96ddc09417293c6dc0a4206f17d.png">
Step 5: Confirm
Click [Confirm Supply] on the message pop-up.
<img src="https://academy-public.coinmarketcap.com/optimized-uploads/7ff8048903b84d8195ca59da31ef10c3.png">
Your wallet will ask you to confirm the action.
After a short wait, you will see your LP Token balance at the bottom of the page.
<img src="https://academy-public.coinmarketcap.com/optimized-uploads/eee3124b787148c1a306b63740ed77f3.png">
Position Exchange’s DEX 2.0 will promisingly be a great choice for both newbies and expert futures trading!

What is AMM and what is its role on DEXs?

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