Complete Example Token Side AMM

Description
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This diagram models a decentralized finance (DeFi) liquidity pool and automated market maker (AMM) system, specifically focusing on the mechanisms by which cryptocurrency and tokens interact within the liquidity pool and how trading, staking, and liquidity management activities impact the financial state of the system. It captures a variety of operations such as adding and removing liquidity, buying tokens with cryptocurrency and vice versa, and calculating token price based on existing liquidity and market dynamics. The system also incorporates elements for handling transactions fees and rewards, showcasing how resources flow between different pools like "Token," "Crypto," "Token Rewards," and "Tokens in Circulation" through a combination of source, drain, pool, and gate nodes, assisted by registers computing critical values like token prices and liquidity adjustments.

Registers within the model calculate the outcomes of transactions and liquidity events using formulas that take into account the current state of the pools (e.g., total amount of tokens and cryptocurrency), the transaction sizes, and predefined commission rates. These calculations dynamically influence the "constant number (k)" representing the product of the liquidity pool's token and crypto reserves, which is a key invariant in AMM designs aimed at ensuring liquidity and price stability. This computational graph not only demonstrates the fluid exchange of assets within a DeFi ecosystem but also highlights the considerations for maintaining balanced liquidity and the role of transaction fees in rewarding liquidity providers while facilitating trade and staking activities within the system.
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