Exchange Rate → Liquidity Pools
The exchange rate for any City is represented in the below equations:
Where:
The Exchange rate is the “price” where Traders AND LPs will swap Liquidity Tokens for USDC and vice versa.
Increases Exchange Rate
⬆️ Trading Fee Paid into Pool
⬆️ Pool Impact Fee Paid into Pool
⬆️ Funding Fee/Rebate Paid into Pool
⬆️ Negative Trader P&L – Trader Losses
Decreases Exchange Rate
⬇️ Funding Fee/Rebate Paid to Trader
⬇️ Positive Trader P&L – Trader Gains
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