Glossary

Asset

Are digital tokens representing various forms of value, including cryptocurrencies, fiat currencies, and other financial instruments. They are uniquely identified by their asset code and the issuer’s public key, with assets created through payment operations by the issuing account.

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.

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

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

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 support reentrancy.

Invariant The "k" value in the constant product formula.

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.

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

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

Price impact The difference between the mid-price and the execution price of a trade.

Pool Liquidity within a pair is pooled across all liquidity providers.

Slippage The amount the price moves in a trading pair between when a transaction is submitted and when it is executed.

Token Interface

Token interface standar. Read more