Platform

Platform

Liquidity Pools: Market and Utility Value

AMM liquidity pools are used for automated, self-custodial TEL exchange with digital assets and on-chain FX, enabling crypto exchange, remittances and other user cases. Liquidity miners provide TEL and other assets to liquidity pools, earn exchange fees from trades, and stake their liquidity provider tokens on TELx. Miners harvest TEL issuance and use it as political power to propose and vote within their Miner Group in Telcoin Platform governance.

Market Value

Price associated to liquidity pools. AMM liquidity pools are valued based on the sum of the total assets in a given pool, they automatically price tokens based on their token reserve ratios, and the fee structure to transact is typically between 0.01% to 1.0%.

  • Liquidity Value: The total value of a liquidity pool depends on the sum total of assets in a pool multiplied by the prices of both assets.
  • Pricing Mechanism: Liquidity pools price assets based on their reserve ratios. When a user makes an exchange transaction, they deposit one pool asset and receive the other. The price increases for the asset they purchased based on these exchanges, as there are now less of the purchasing asset and more of the selling asset in the pool while the reserve ratio has maintained.
  • Fee Structure: Users pay fees to trade through liquidity pools, and liquidity miners earn fees from trades through their pools. The fee structure of a given pool is set by the pool creator. It generally ranges from 0.01 to 1%, but some use cases beget higher fees. Fees can be dynamically adjusted based on pre-determined conditions.
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    Consumption Utility

    Liquidity pools are valued for exchange. Users can exchange their assets using automated, self-custodial markets that guarantee liquidity at every price level, are accessible to anyone with an internet connection, and are always available on the blockchain.

     

    Production Utility

    Liquidity miners produce pools, earn fees from consumers, and harvest TEL issuance. The other miners on the Platform benefit from the ability to offer exchange products to their consumers. Validators earn gas fees from exchange activity on Telcoin Network.

  • Liquidity Miners: Provision TEL and other TELx assets to liquidity pools, earning fees when users exchange assets through their pools and mining TEL issuance based on their pro-rata share of staked liquidity across markets over time.
  • Developers: TELx liquidity pools serve as the DeFi engine for Telcoin, the depth of liquidity and variety of protocols, markets, and assets available across TELx determines a Developer’s capability to provide their users with a more expansive and performant user-owned product suite.
  • Stakers: Stakers’ earnings depend on a high quality marketplace to power the products use and market to new uses.
  • Validators: Validators earn gas fees each time a transaction on TELx takes place. These transactions include: smart contract deployment (staking contracts, liquidity pools), liquidity provision, and trades. As demand for TELx liquidity pools grows, validator earnings increase and benefit from this adoption. Additionally, validators rely on TELx to exchange their gas fee revenue for other assets at any time without having to rely on central parties.

    • Social Value

    Value in social processes, such as governance.

  • Liquidity Miners: Liquidity miner political power in Miner Group decision-making processes is based on their pro-rata share of liquidity staked on TELx.
    • Description: Liquidity miners receive a liquidity provider token when they provide liquidity to a market and stake their LPT in staking contracts to harvest TEL issuance and vote in governance processes. An individual liquidity miner’s voting power in council member selection and constitutional-choice processes is based on their pro-rata share of staked TELx liquidity at the time of the proposal.
  • Learn more about the utility of AMM liquidity pools here:
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    TELx: Consumer Products