Fan tokens Exchange
In order to allow fans to make all transactions with fan tokens without leaving the platform, Sport Investing has developed and launched its own exchange. Sport Investing has the same deployed functionality as any centralized exchange. Our exchange would be based on the liquidity pool. Liquidity pools are a pool of funds that provide liquidity for centralized exchanges (CEX). To explain further benefits of our exchange and minor moments of liquidity pool, we need to regard what liquidity providers and AMMs are.
Automated market makers are smart contracts that create a liquidity pool of tokens, which are automatically traded by an algorithm rather than an order book. This effectively replaces a traditional limit order-book with a system where assets can be automatically swapped against the pool’s latest price.
There are two main types of automated market makers (AMMs). While one may be governed and set up by professional market makers, the other is fully automated by a set algorithm, allowing any user in the market to participate by depositing liquidity.
Individuals or professional market participants that utilize their crypto assets to supply liquidity to a liquidity pool in order for the underlying DeFi protocol to function are known as liquidity providers (LPs).
Through the use of automated market makers(AMMs), decentralized trading pools offer up the financial market to anybody who wants to be a liquidity provider.
Liquidity providers, for example, fund with two or more cryptocurrencies(in our case a liquidity provider that in the most ratio would be Sport Investing company would provide in liquidity pool SITX and particular fan token), usually in equal proportions, through a decentralized exchange. This creates a market for that crypto pair, allowing for easier and faster trading. Furthermore, the liquidity pool decreases the chance of pumping and dumping the market because if some people would like to do it, their price of buying fan tokens would be more and more unprofitable for them.
There are three distinctive benefits. First, it makes people instantly get their fan tokens or SITX. Therefore, the second benefit is that it is easier to explore our platform. The most important benefit is that such a system decreases the chance of pumping and dumping the market. While there are benefits that outweigh drawbacks, so we chose some systems, there are also hardships and complicated moments.
The most common risk that liquidity providers could face is that of impermanent loss. In simple terms, impermanent loss means that the fiat value of a user’s crypto assets deposited to a pool could decline over time.
Impermanent loss is inherently interwoven in the AMM concept and occurs when the price of a pool’s tokens changes compared to when they were deposited. The more significant the change is, the bigger the loss. However, this is risk determined for liquidity providers, and while the biggest liquidity provider would be Sport Investing company, we would take the most essential risk on ourselves.
Initial liquidity would be provided exclusively by the Sport Investing company. Commission in the first time would be zero for users of Sport Investing to provide users for the first time elaborate on the working system of the platform, and to be convenient with it.