Today I took my minted testnet coin and put it on a simulated decentralized exchange to see how the fees interact with the liquidity pools. Unexpected and interesting things began to happen. I've began writing a document where I keep track of various tests. For example, I learned that both providing liquidity to the pool and removing liquidity both trigger the fees to be charged. Burning tokens does not effect the price of the coins either, because of the way the price is derived from the DEX. The DEX determines the token price based on the ratio of coins in its pools, which is unaffected by a decreasing total supply. This lead me to wonder how the total marketcap of decentralized coins is calculated when there's no market maker to create liquidity in the ecosystem. It seems misleading to me to take the price on a DEX and multiple that by every coin in the current supply. This way, marketcap is created and destroyed every time you mint or burn a token. I'm going to investigate more into the circulating supply of tokens on Hedera.
No comments:
Post a Comment