A trader can swap tokens through AcalaSwap using the price determined by the liquidity pool asset ratio. A trader can an individual using the web application, or arbitrage bots to profit from exchange rate differences amongst various platforms.
The following are protocol traders of AcalaSwap:
- Acala stablecoin protocol uses the AcalaSwap to liquidate collateral in an liquidation event. Liquidating on AcalaSwap is more efficient especially when price fluctuates sharply in a short period of time. The Stablecoin protocol takes into account price slippage, and uses an additional price oracle for ‘fair market price’ before performing an liquidation on the AcalaSwap.
- Network Fee: on Acala and Karura network, users can pay transaction fees in any supported tokens. These tokens are settled for respectively network token ACA and KAR using the AcalaSwap.
Liquidity providers (LPs) deposit equal value of two tokens into individual trading pools, which increases liquidity of the pool. Liquidity providers receive LP tokens representing their share in the pool, and receive accumulative trading fees generated from every trade. Liquidity providers can withdraw their share of the pool anytime by burning their LP tokens, and the accumulated trading fees earned by the liquidity providers will also be redeemed at the same time.