How to add liquidity to Zano's pair on CoinEx

Mr_Kwibs

Mar 15, 2023 • 3 min read

Zano's orderbooks haven't always been as pretty due to the lack of trading and availability on exchanges. However, over the past months we are happy to say this has improved drastically, especially due to our recent listing on CoinEx. In order to continue improving our liquidity situation, we request the community to step in and contribute during this process.

By actively contributing liquidity to the CoinEx platform, the user plays an instrumental role in fortifying and perpetuating a remarkably stable and highly efficient trading environment for Zano. This pivotal involvement bolsters the depth of the market and mitigates the potential for sudden price fluctuations, ensuring that Zano's value remains steady and conducive to seamless trading experiences.

The CoinEx AMM

Automated Market Making (AMM) is a protocol that automatically calculates buying and selling prices according to a formula to provide a continuous quotation for the market. In terms of trading mechanism, CoinEx combines AMM with the order book, and the system automatically converts the liquidity pool into an order book. CoinEx AMM allows every Zano user to become a market maker. By adding liquidity to the Zano liquidity pool, users can share 50% of the trading fees earned by CoinEx.

Earn profits for providing liquidity

As a liquidity provider, users can earn a share of the trading fees generated within the pool, providing a consistent source of income. Additionally, users have the opportunity to accumulate daily profits, which are automatically deposited into their AMM accounts.

Risks

Impermanent Loss

The assets in the AMM Account will be added to the liquidity pool for automated market making. Due to price fluctuations, impermanent losses might occur and the amount ratio of the two assets (ZANO/USDT) might change along with the price movement. Impermanent loss will gradually be wiped out when the price ratio changes back and eventually, users can gain profits from providing liquidity.

Trusting a third party

Holding funds on an exchange is always a risk as you are trusting a third party platform with your funds. We recommend to never keep big amounts on any exchange but rather store them safely in one of Zano's official wallets.

Calculating your AMM profits

CoinEx AMM income comes from the trading fees returned by CoinEx and depends on the volume of the ZANO/USDT pair . All users who provide liquidity to the liquidity pool of AMM share 50% of the trading fees created by the pair, according to their proportion of the liquidity pool. Suppose ZANO/USDT market has made CoinEx 100 ZANO & USDT in trading fees in an hour. If your liquidity takes up 10% in the ZANO/USDT liquidity pool for the hour, you will get the following hourly income:

100 x 50% x 10% = 5 USDT
100 x 50% x 10% = 5 ZANO