Glossary

Automated market maker

An automated market maker is a smart contract on Soroban 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 Soroswap. See x*y=k.

Token Interface

Token interface standar. Read more

Factory

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

Pair

A smart contract deployed from the Soroswap Factory that enables trading between two 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 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 Soroswap 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.

Core

Smart contracts that are essential for Soroswap 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 Soroswap 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. Currently flash swaps are not supported in Soroswap as Soroban does not supports reentrancy.

x * y = k

The constant product formula.

Invariant

The "k" value in the constant product formula