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Zecrey DEX

What is Zecrey L2 swap?

Swap in Zecrey L2 is a typical decentralized exchange (DEX) based on an automatic market maker (AMM). Users can deposit assets into L2 to swap for target assets, and add liquidity to earn benefits. On Zero, the gas token of swap can be any token supported by Zecrey.

What is Liquidity?

In Zecrey, Liquidity providers(LP) will receive REY token at a certain APY as a reward for providing liquidity to the liquidity pool of decentralized swap DEX. The liquidity pool is a pool of tokens locked in a smart contract to increase market liquidity among traders. A liquidity pool has two kinds of tokens, which is a trading pair. When a new liquidity pool is created, the first LP will set the initial price in the pool. If that price in the pool is inconsistent with the global market, there will be profitable arbitrage opportunities and the LP will suffer impermanent losses. So the LP is incentivized to keep the exchange ratio of the two assets close to the market price.