Automated market maker

An automated market maker is a smart contract on Tezos that holds on-chain liquidity reserves. Users can trade against these reserves at prices set by an automated market making formula.

Constant product formula

The automated market making algorithm used by Plenty. See $x*y=k$.

FA1.2 and FA2 tokens

FA1.2 is a fungible token standard on Tezos whereas FA2 is a mixed token standard allowing both fungible and non-fungible token creations on Tezos. Plenty supports approved FA1.2 and fungible FA2 tokens.

Trading Pair/Liquidity Pool

A smart contract that enables trading between 2 tokens.

Liquidity provider / LP

A liquidity provider is someone who deposits an equivalent value of two tokens into the liquidity pool. Liquidity providers take on price risk and are compensated with fees.

Mid price

The price between what users can buy and sell tokens at a given moment. In PlentySwap this is the ratio of the two token reserves.

Price impact

The difference between the mid-price and the execution price of a trade.

Slippage

The amount the price moves in a trading pair between when a transaction is submitted and when it is executed.

$x * y = k$

The constant product formula.