FAQ

 

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1 .What is HumbleSwap?

HumbleSwap is an automated market maker, or AMM, which is a kind of distributed cryptocurrency exchange.

2. Who uses HumbleSwap?

Anyone can use HumbleSwap to swap tokens or provide assets for swappers in the form of liquidity pools. Swappers typically want to exchange tokens for another, and poolers wish to deposit their assets to earn revenue/fees.

3. What are Pools?

Pools, or liquidity pools, are accounts that have pairs of specific assets (tokens) deposited in a given ratio x*y=k, where k is a constant. Pools give returns to asset providers by charging fees to swappers. Pools track each deposit using a liquidity token, representing any pooler's position in a liquidity pool account. When poolers deposit assets, they are given a liquidity token in return. Poolers who wish to withdraw their fees from the pools must burn their liquidity tokens, which results in the removal of assets and fees from the pool.

4. How are rates determined?

The pools themselves determine the price for any asset, simply the ratio of the assets in the pool and the amount to be swapped. The total product of the pool always stays constant. In this case, the k constant in the formula (x*y=k) plus the fees accrued. This formula is the Constant Product formula, which is the most popular formula for an automated market maker.

5. How do Poolers get fees?

If a pooler removes assets from the pool, the fees associated with the pro-rata amount of assets will be returned to the pooler. Therefore, poolers only receive fees when they leave the pool. Fees are compounded in the pool with every swap, and fees are only removed as poolers exit by liquidating their assets.

6. How do fees and assets leave Pools?

The contracts for liquidity pools only release assets when there is a swap, in which case an equal value of the tokens is deposited to maintain the constant. Second, assets leave the pools when poolers remove their assets and liquidate their positions.

7. I want to swap, what do I need to do?

It's easy to swap assets on HumbleSwap: simply log in to the application by connecting your wallet, choose to swap an asset, and then sign all of the corresponding transactions. You'll need at least one token in the pair(s) in order to place a swap order/transaction.

8. I want to earn fees from pools, what do I need to do?

As a pooler, you are expected to either create pools of assets, which are typically token pairs or to add token pairs to existing pools. In all circumstances, tokens are deposited in pairs, and poolers receive liquidity tokens in return for their asset deposits. These liquidity tokens can be redeemed later to recover the fees and the assets that they represent.

9. Can I make a pool for any asset?

Yes, you can create an asset pair and a liquidity pool anytime for any pair of assets. Although we do have a list of standard pools, the system supports the ad-hoc creation of any liquidity pool asset pair.

10. How are fees paid into the pools?

The fees paid by swappers are paid directly into the pools as an additional amount of the token given to swap in the pool. When swapping token A for token B, a small amount of Token A, the input token, is charged as a fee and added to the liquidity of the pool.

11. Can I trade liquidity tokens?

Yes, liquidity tokens received by poolers are themselves assets that can be traded.

12. What happens if the Pool exchange rate changes between transactions (slippage)?

There are slippage tolerance algorithms that reduce the possibility of asking for more of an asset than allowed. If the initial swaps succeed, the minimum amount will be received. 

13. What is price Impact and how it would affect me? 

Price impact is the influence of the user's individual trade over the market price of an underlying asset pair. It is directly correlated with the amount of liquidity in the pool / Automated Market Maker (AMM). This function analyzes current trades between trading pairs and will give you an idea of how much slippage there currently is. This helps you to decide whether to go ahead at all, as well as how much to set the slippage tolerance to if you do want to go ahead with the trade.

14. What is the minimum received?

The Minimum Received indicator is the least amount of tokens you will receive based on your slippage tolerance (a worst-case scenario — anything below and the transaction gets automatically canceled).

15. Why is there an ID for each liquidity pair token?

The ID is to identify each asset. Each asset, will have a unique ID. When you pool two assets, you get an LP token in return which has its own ID number independent of the two.