Understanding Automated Market Makers

Welcome to the hub of our innovative hybrid DEX model - our exchange page. Here, you'll discover the details of the unique hybrid AMM approach and how it sets USDFI apart.

The USDFI protocol incorporates multiple AMM models, which have been combined into a single system. The design also includes the implementation of a unique master router to provide traders and liquidity providers with a range of options.

Why USDFI?

The primary function of the AMM Operations is to facilitate secure trading of digital assets with minimal fees and low slippage. Slippage refers to the discrepancy between the current market price of an asset and the price at which the trade or transaction is executed, which can result in a higher or lower amount of the desired tokens being received. To ensure access to the most favorable rates, there are two categories of digital assets:

a) highly correlated in price vs a reference price (such as $USDC, $USDT, $BUSD and $DAI, ie stablecoins and liquid staking derivatives), and

b) uncorrelated in price - digital assets not in category a)

The USDFI protocol provides two types of liquidity pools, stable pools (sAMM) and variable pools (vAMM), to cater to the needs of different token pairs. The liquidity of a given pool, measured by the value locked in it, has a direct correlation with the level of slippage it can offer, with deeper liquidity resulting in price impact.