The remarkable phenomenon of liquidity pools unveils a realm where asset swaps flourish among traders. These pools owe their existence to the benevolent efforts of liquidity providers, individuals who generously allocate their funds to diverse reservoirs of liquidity. As a token of gratitude, these providers receive well-deserved remuneration in the form of block rewards and swap fees, reaping a rewarding yield in return.

Within the hallowed grounds of these liquidity pools, traders find respite as they effortlessly engage in the exchange of assets. Alas, such convenience does come at a modest cost, wherein traders must fulfill their financial obligations by remitting a network fee alongside a slippage fee to access these transformative havens. Nonetheless, the unrivaled advantages and opportunities bestowed by these enchanting pools undoubtedly overshadow the nominal fees incurred.

Let the ethereal essence of liquidity pools forever empower traders and liquidity providers alike, fostering a thriving ecosystem of financial interchange.

Fees

The pools' fee structure can be categorized into two distinct types.

Firstly, block rewards are derived from the emissions of the Maya Protocol and are distributed to every pool that has facilitated a swap within a given block. The magnitude of the fee is determined by the number of swaps conducted, relative to other pools. In the absence of swaps during a block, the block rewards are evenly shared among all active pools.

Secondly, slippage fees are contingent upon the extent of slippage incurred during a swap. The degree of slippage is influenced by the depth of the pool and the volume of the swap. Pools with greater depth experience lower slippage fees, whereas higher slippage fees are associated with swaps of larger volumes.

Fee Generation

Traders contribute to fee generation each time they engage in a swap. The fee amount paid is influenced by the volume of the swap relative to the pool's depth. Greater swap volumes result in higher slippage, which proves advantageous for liquidity providers.

Notably, the majority of fees are anticipated to originate from arbitrage bots, an integral component of the system. These automated bots ensure that the pool's prices accurately reflect the prevailing market value by actively adding or removing funds from the pools and executing profitable buy/sell transactions on other exchanges.

Reward Distribution

Rewards are disbursed at regular intervals, approximately every 5 seconds (per block). Liquidity providers receive their rewards in CACAO along with the corresponding asset linked to the pool. For instance, if an individual has contributed funds to the CACAO:BTC pool, their rewards will be received in CACAO and BTC. These rewards are then added to the liquidity provider's aggregated pool of funds.