Megaton Finance is able to exchange {Token standard} tokens with each other based on liquidity pools. Token exchange is executed based on the equation of Uniswap v2 AMM, x * y = k, and slippage occurs during token swap.

When exchanging tokens on Megaton Finance's pool, the transaction fee of 0.1% is incurred according to each liquidity pool's fee policy. The transaction fees are paid 100% to LP.

Pool Creation and Swap

Liquidity pools in Megaton Finance are built on WTON, ETH, USDT, etc. If you want to create additional liquidity pools, you can add pools by pairing WTON and other tokens. Since all pools are created based on WTON, and there is no routing function in the early version of Megaton Finance, you need to go through two swap processes when swapping tokens other than WTON. When swapping oUSDT to oDAI, you have to swap first oUSDT to WTON, then swap WTON to oDAI in the WTON-oDAI pool.

Pricing Algorithm for x * y = k

- x: WTON / y: MEGA - Assuming that the number of reserves of x and y supplied to the pools is 100 each - x(100) * y(100) = k(10,000) - If a trader pays 10 WTON and purchases MEGA, the number of MEGA the trader acquires and the number of MEGA tokens remaining in the pool is calculated as follows: a. Amount of WTON remaining in the pool x(110) * y(Reserve) = 10,000 y(Reserve) = 90.9 MEGA b. Amount of MEGA the trader earns 100 - 90.9 MEGA = 9.1 MEGA In the examples we have seen, the token price ratio of the initial WTON/MEGA pool was 1:1. So the trader would have paid 10 TON and expected to receive 10 MEGA. However, the amount of MEGA acquired by the trader is 9.1 MEGA. In this way, in the x * y = k algorithm, the difference between the price of the token you ordered and the price of the token for which the actual transaction was concluded is called slippage. Traders must check the slippage before placing a swap order.

Last updated