Dynamic AMM token pricing Model
About this model
This diagram models a cryptocurrency trading and liquidity management system, intricately mapping out the mechanics of token and cryptocurrency exchanges, staking rewards, liquidity pools, and the calculation of token prices. It illustrates a dynamic economic model that involves buying and selling tokens and cryptocurrencies, adding and removing liquidity, collecting transaction fees, and determining the market value of tokens in a decentralized finance (DeFi) ecosystem.
At the heart of the system are pools that represent various assets like tokens, crypto, token rewards, and liquidity information. Source nodes indicate the inflow of resources — for instance, crypto entering the automated market maker (AMM), or liquidity being added. Pools accumulate these resources, affected by actions simulated through gates that control the flow based on specific conditions or randomized events, and trades executed by users. Registers compute outcomes such as tokens bought, crypto exchanged, and the new token price, based on the current state of the pools, enforcing the logic behind transactions and liquidity adjustments. Drains represent the outflow or consumption of assets, depicting elements like tokens sold or liquidity removed. The comprehensive use of resources, state connections, and gates outlines the cyclical nature of trading and liquidity management, capturing the complexities of DeFi protocols.
"Dynamic AMM token pricing Model" is a public Machinations diagram shared in the Community by Mishael Stanley, with 117 components.
It was created in August 2022 and last edited in March 2025.
Open the diagram in the Machinations app and press Play to watch the resources move, adjust its values to test how the system responds, or remix it to make an editable copy in My diagrams.
