AMM

Introduction

In the latest wave of DeFi protocols, we’ve seen numerous platforms emerge that allow users to stake their funds in return for the protocol’s tokens. We’ll take a look at RocketFarming.finance – a decentralized protocol wich will be built on Polygon/Matic network

The AMM

RocketFarming will use an automated market maker (AMM) model. That means that while you can trade digital assets on the platform, there isn’t an order book where you’re matched with someone else. Instead, you trade against a liquidity pool.

Those pools are filled with other users’ funds. They deposit them into the pool, receiving liquidity provider tokens (or LP) in return. They can use those tokens to reclaim their share, plus a portion of the trading fees.

Token swaps on RocketFarming are a simple way to trade one ERC-20 token for another via automated liquidity pools.

The liquidity provided to the exchange comes from Liquidity Providers ("LPs") who stake their tokens in "Pools". In exchange, they get LP tokens, which can also be staked to earn Rocket tokens in the "farm".

When you make a token swap (trade) on the exchange you will pay a 0.6%, which is broken down as follows:

• 0.3% - Returned to liquidity pools in the form of a fee reward for liquidity providers

• 0.3% - Sent to the RocketFarming Treasury