How Market Making is like at YOLO

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Added by allcryptostaff
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The first approach is External Price Discovery. The token’s market price is queried from other exchanges. There is no need for big reserves.
It is able to support a small reserve size while making sure the token is not traded with losses.

The second approach is Reserve Based Price Discovery. The token’s market price is determined uniquely by the size of the current reserve according to a fixed exponential formula. Prices can be updated in real time as an exponential formula is applied immediately once someone trades your token.

Combining these two approaches, we call it the Exponential Liquidity Reserve on YOLO. The sub-second block time and the flexible transaction fee model helps on-chain market making over EOS more efficient. YOLO network offers the unified solution, namely, the Exponential Liquidity Reserve which supports a small reserve size while allowing real time price updates to the reserve.
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