mimo protocol
Search…
The Formulas
This page shows the formulas used in mimo protocol.

# Automated Market Making

In each trade, traders trade certain amount of a particular token for certain amount of another token with the price defined by a formula. There is no orderbook and waiting for fulfillment.
The formula that mimo uses is the famous
$x * y = k$
that has been widely adopted by AMM based DEX, such as uniswap.

# The formula $x * y = k$

Assume that
$X$
is the source token, and
$Y$
is the destination token. In mimo,
$X$
,
$Y$
could be either IOTX or XRC20 tokens. Let
$x$
,
$y$
be X-token, Y-token in current liquidity pool, respectively.
Based on the famous AMM equation
$x * y = k$
where
$k$
is a constant.
The product of
$x$
and
$y$
remains the same before and after trading. For details, please refer to vbuterin's post.

# Pricing based on the inputs

Let's further define
$d_x$
,
$d_y$
are how many X-tokens you want to pay, and how many Y-tokens you will get, respectively.
We'd like to know, the price based on
$d_x$
or
$d_y$
. IfgetInputPrice denotes how many Y-Tokens (i.e.
$d_y$
) can be bought by selling a given
$d_x$
,
$getInputPrice(x, y, d_x) = \dfrac{y * 997 * dx}{1000 * x + 997 * d_x}$
or in code,
1
getInputPrice(x, y, dx) = (y * 997 * dx) / (1000 x + 997 dx)
Copied!
If getOutputPrice denotes how many X-tokens is needed to buy
$d_y$
Y-tokens,
$getOutputPrice(x, y, d_y) = \dfrac{1000 * x * d_y}{(y-d_y)*997} + 1$
or in code,
1
getOutputPrice(x, y, dy) = 1000 x * dy / ((y - dy) * 997) + 1
Copied!
where / in above equations denotes divToInteger, which means divide with rounding to floor of the results.

# Price impact

In AMM, the price would change after each trade,
$d_x$
,
$d_y$
and
$x, y$
the liquidity in the pool. The price impact is what traders want to know before the trade.
There are two ways of calculating price impact. It can be based on
$x, y, d_x$
, or
$x, y ,d_y$
. One is based on input , one is based on output.
$PriceImpact(x, y, d_x) = \frac{ (1000*x)^2} { (1000*x + 997*d_x)^2} -1$
or
$PriceImpact(x, y, d_y) = \dfrac{(y-d_y)^2}{y^2} -1$
in code,
1
price impact(x, y, dx) = (1000*x)^2 / (1000*x + 997*dx)^2 - 1
2
price impact(x, y, dy) = (y - dy)^2 / y^2 - 1
Copied!
Note that the price impact is always between -1 and 0.

# Cross-Trading Price Impact

If there are no direct trading pairs between two tokens, like in V1 where we only support IOTX/token pairs, traders need to use one token, such as IOTX, as a bridge to trade among two tokens.
In this case, the price impact would be
$PriceImpact_{cross} = PI_1 * PI_2 + PI_1 + PI_2$
or in code,
1
price impact = PI1 * PI2 + PI1 + PI2
Copied!
where
1
PI1 is the price impact of first trading pair, such as x to IOTX
2
PI2 is the price impact of second trading pair, such as IOTX to y
Copied!