Glossary

Automated market maker

An automated market maker is a smart contract on Ethereum 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 Ring Swap. See x*y=k.

ERC20

ERC20 tokens are fungible tokens on Ethereum. Ring supports all standard ERC20 implementations.

Factory

A smart contract that deploys a unique smart contract for any ERC20/ERC20 trading pair.

Pair

A smart contract deployed from the Ring V2 Factory that enables trading between two ERC20 tokens.

Pool

Liquidity within a pair is pooled across all liquidity providers.

Liquidity provider / LP

A liquidity provider is someone who deposits an equivalent value of two ERC20 tokens into the liquidity pool within a pair. 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 Ring this is the ratio of the two ERC20 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.

Core

Smart contracts that are essential for Ring to exist. Upgrading to a new version of core would require a liquidity migration.

Periphery

External smart contracts that are useful, but not required for Ring to exist. New periphery contracts can always be deployed without migrating liquidity.

Flash swap

A trade that uses the tokens being purchased before paying for them.

x * y = k

The constant product formula.

Invariant

The "k" value in the constant product formula