mimo protocol

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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$d_y$

. If`getInputPrice`

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)

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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

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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

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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

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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

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Last modified 1yr ago