AMMs implement a peer-to-pool method, where liquidity providers (LPs) contribute assets to liquidity pools while individual users exchange assets with a pool containing the swap assets. It benefits both LPs and swap users with accessible liquidity provision and swap. Users obtain immediate liquidity without having to find an exchange counterparty, whereas LPs profit from swap fees from users.
As AMM, Tyche uses liquidity pools (LP) of different assets valued relative to each other. The liquidity pool will be used as a single counterparty for each transaction, pricing assets algorithmically with a conservation function unlike traditional order-book-based exchanges, where the price of an asset is determined by the last matched buy and sell orders.
Tyche DEX will share the same conservation function, slippage, and divergence loss functions as Uniswap. As such, the system is structurally similar, but the main difference may lie in parameters and/or mechanism adaptation
- Decentralized: The Tyche Protocol is completely decentralized, meaning that no central authority has control over the system. This eliminates the need for intermediaries, making transactions faster, cheaper, and more secure.
- Automated Market Making: The Tyche Protocol uses an automated market-making algorithm to match buyers and sellers and determine the price of assets. This eliminates the need for a centralized exchange and offers a more efficient and fair market.
- Token Agnostic: The Tyche Protocol is token agnostic, meaning that users can trade any token they wish, as long as it is supported by the L2s/EVM platforms. This allows for a more diverse and dynamic market.
- Low Fees: The Tyche Protocol has low transaction fees, making it more accessible and affordable for all users.
- Secure: The Tyche Protocol is built on top of the zKsync blockchain and secured by Etherum security, providing a secure and transparent ledger of all transactions.\
