Mammoth Help Center
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  • Introduction
    • Key Features
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  • Key Mechanics
    • Bonding Curve
    • Liquidity Pool
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On this page
  • Shared SOL Pool Explanation
  • Relationship Between Minted Tokens and Pool Value
  • Function in Different Market Types
  • Benefits of the Shared Liquidity Pool
  • Interaction with Bonding Curves
  1. Key Mechanics

Liquidity Pool

Shared SOL Pool Explanation

Mammoth uses a shared SOL liquidity pool for both YES and NO tokens in each market. This pool contains all the SOL that has been used to buy tokens.

Relationship Between Minted Tokens and Pool Value

The total value of all bought tokens (both YES and NO) always equals the amount of SOL in the pool. This ensures that the market is fully collateralised at all times, providing security for all participants.

Function in Different Market Types

  • In cryptocurrency markets: The pool provides liquidity for trades related to price or market cap predictions.

  • In world event markets: The pool ensures liquidity for bets on various event outcomes.

Benefits of the Shared Liquidity Pool

  1. Continuous Liquidity: Users can buy or sell tokens at any time without needing to match with a counterparty.

  2. Market Stability: The pool helps maintain price stability and reduces the impact of large trades.

  3. Fair Pricing: The relationship between the pool and token supply ensures that token prices accurately reflect market sentiment.

Interaction with Bonding Curves

The liquidity pool works in tandem with the bonding curves to determine token prices. As users buy or sell tokens, the pool size changes, which in turn affects the position on the bonding curves and thus the token prices.

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Last updated 6 months ago