SkySwap was a difficult project for us. We have previously worked on defi protocols, but SkySwap is a market maker that is automated. In practice, it is a collection of smart contracts that offer a common approach for establishing liquidity pools, delivering liquidity, and swapping assets.
Each liquidity pool has two assets. The pools keep track of aggregate liquidity reserves as well as the pre-defined pricing mechanisms of liquidity suppliers. Reserves and prices are immediately changed whenever someone trades. Central order books, third-party custody, or private order matching engines do not exist.
Because reserves are automatically rebalanced after each transaction, a SkySwap pool may always be used to buy or sell a token — unlike traditional exchanges, traders do not need to match with specific counterparties to conduct a trade.
As a DeFi project, token creator, or other interested party, you may incentivize in-range liquidity provision on a SkySwap pool.
Constant Product Market Maker Model:
SkySwap separates itself from other decentralized exchanges by using a pricing approach known as the “Constant Product Market Maker Model.” SkySwap may accept any token by funding it with the same amount of ETH as the ERC20 token being traded.
There is no need for authorisation to list any ERC20 token on SkySwap. Each currency has its own smart contract and liquidity pool, which can be easily constructed if none exist.
When a coin has its own exchange smart contract and liquidity pool, anybody may trade it or contribute to the liquidity pool for a 0.3 percent fee.