DoveSwap v3

DoveSwap is an automated liquidity protocol powered by a constant product formula and implemented in a system of non-upgradeable smart contracts on the Polygon zkEVM blockchain. It obviates the need for trusted intermediaries, prioritizing decentralization, censorship resistance, and security.

Each DoveSwap smart contract, or pair, manages a liquidity pool made up of reserves of two ERC-20 tokens.

Anyone can become a liquidity provider (LP) for a pool by depositing an equivalent value of each underlying token in return for pool tokens. These tokens track pro-rata LP shares of the total reserves, and can be redeemed for the underlying assets at any time.

Pairs act as automated market makers, standing ready to accept one token for the other as long as the “constant product” formula is preserved. This formula, most simply expressed as x * y = k, states that trades must not change the product (k) of a pair’s reserve balances (x and y). Because k remains unchanged from the reference frame of a trade, it is often referred to as the invariant. This formula has the desirable property that larger trades (relative to reserves) execute at exponentially worse rates than smaller ones.