THE AUTOMATED MARKET MAKER OF POLKABRIDGE

As we approach the release of the V2 of the Polkabridge Automated Market Maker (AMM) as recently announced, here’s a rundown of what the AMM is and what it does.

An Automated Market Maker (AMM) is a liquidity aggregator and decentralized exchange (DEX), which allows for order-matching without using a traditional order-book. Instead of offers and counter offers, it utilizes algorithms with smart contracts which deterministically compute the asset price at any given time automatically and uses liquidity pools to execute swaps.

A liquidity pool is itself a smart contract, containing assets from different users, looking to put their capital to work.

Generally, Automated Market Maker (AMMs) utilize the constant product formula x*y=k for the liquidity pools.

where

x represents the first token A

y represents the second token B

k must be maintained by traders wishing to withdraw the second token B by depositing first token A proprotionally.

MULTI-CHAIN AUTOMATED MARKET MAKER

PolkaBride is designing a multi-chain Automated Market Maker (AMM) type decentralized exchange, which will allow the users to simulatenous execute swaps or trade assets on different blockchains. It is going to be the flagship PolkaBridge product. It will support Ethereum, Polygon,

Solana, Polkadot and Binance Smart Chain (BSC) — after full deployment. For instance, users can swap Ether (ETH) with PolkaBridge (PBR) token on the Ethereum blockchain and also exchange Binance Coin (BNB) with PolkaWar (PWAR) token — all from one platform. PolkaBridge multi chain AMM decentralized exchange would charge 0.2% fees per swap, out of which 80% would go to the liquidity providers and the remaining 20% would be routed to a wallet, later used
to buy back the native PBR token and burn it. This will increase the value of the PBR token.

CROSS-CHAIN AUTOMATED MARKET MAKER

After the launch of multi-chain AMM type decentralized exchange, the next step would be the development of cross-swap functionality on it. Essentially, it’s the ability to swap one asset on one blockchain with another asset on the other blockchain, without using any intermediary or third party. For instance, you want to exchange Ether (ETH) on the Ethereum blockchain with Polkadot (DOT) on the Polkadot blockchain.

For the primary Polkadot base, PolkaBridge uses Moonbeam’s parachain solution, allowing Ethereum compatible smart contracts to run on Polkadot and allowing the protocol to maintain a connection. In practice, PolkaBridge will use two smart contracts running in parallel to swap: one on Polkadot, the other on the corresponding blockchain e.g Ethereum. The same principle will be utilized to connect to Solana, Binance Smart Chain and Polygon also.

PolkaBridge’s Automated Market Maker will launch on or before November 20.

For more information:
Group: https://t.me/polkabridgegroup
Website: https://polkabridge.org
Twiter: https://twitter.com/realpolkabridge
Medium: https://medium.com/@polkabridge