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 Baptswap.

Factory​

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

Pair​

A smart contract deployed from the Baptswap V2 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 Baptswap 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 Baptswap 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 Baptswap 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