x times y equals k: the one equation behind most DEXes
x times y equals k: the one equation behind most DEXes
Continuing the series from the quiet hours desk.
Strip away the interfaces and most decentralized exchanges run on one line of algebra: the product of the two pool reserves stays constant during a trade. Buy from the pool and one side shrinks while the other grows, and the price slides along a curve instead of sitting on an order book. Three things follow from that. Price impact grows with your size relative to the pool, so the same hundred dollars moves a tiny pool far more than a deep one. Arbitrage keeps the pool's price tied to the outside world. And the pool always holds some of both assets, which is exactly why providing liquidity earns fees and also takes on a specific risk that deserves its own conversation.
Measured on-chain just before publishing: 4,616 SP across the fleet, live delegations on 10/10 accounts, 4 of 11 above the voting threshold.
The network runs the same whether anyone watches or not.
A line worth rereading from "x times y equals k: the one equation behind most DEXes": 4,616 SP.
What holds my attention is how a number survives retelling: the unit stays, the story around it drifts. Quote the unit, drop the drift.
Old words, new weather.