Liquidity

• anything with a price or valuable, must have liquidity

CEX

• centralised exchanges, use an orderbook(a ledger from both a seller and a trader)

AMM

• LPs provide liquidity, traders swap and trade

constant function market maker

• x∗y=k
• prices from a pool are determined by token A in terms of token B
• High demand increases the price
• When plotted, the constant product function is a quadratic hyperbola
• whenever a trade or occurs, a new spot price is calcualated

uniswap v3

• more changes to the AMM algorithm, more configurable market and more support for stablecoins
• liquidity is added on a price range, and each pool is a set of liquidity positions
• ticks
• concentrated liquidity

Slot0 variables

liquidityuint128
sqrtPriceX96uint160
tickint24
token0address
feeGrowthGlobal0X128uint256
protocolFees.token0uint128
token1address
feeGrowthGlobal1X128uint256
protocolFees.token1uint128

Positions

lpaddress
tickLowerIndexint24
tickUpperIndexint24
liquidityuint128
feeGrowthInside0LastX128uint256
feeGrowthInside1LastX128uint256

Ticks

• TickMath converts prices to ticks

tickIndexint24
liquidityNetint128
liquidityGrossuint128
feeGrowthOutside0X128uint256
feeGrowthOutside1X128uint256

swaps

• new price must be calculated after each swap is executed
• new tick must be calculated too