Kyoto DEX

KyotoDEX is a decentralized exchange ("DEX") for KYOCR series of tokens and any other 3rd party's token backed by active carbon credits. KyotoDEX is non-custodial, which means that—unlike centralized exchanges—KKyotoDEX does not need to possess user's tokens in order for the user to be able to trade them. Instead, the KyotoDEX allows users to trade peer-to-peer, with liquidity pools that are supplied by other users.

To be a liquidity provider, holders of any token need to supply equal parts liquidity for that token (sometimes called the quote token), and a second token (usually Matic, or the system token). In return, these holders receive the liquidity provider tokens that represent their share of the pooled liquidity for that token pair. The existence of this pooled liquidity gives other traders access to the underlying tokens in exchange for a small fee, which is distributed proportionately to all of the liquidity providers.

In this sense, KyotoDEX is also an “automated market maker” (or AMM, for short). While a user’s underlying tokens remain in the pool, fluctuations in the price of the two underlying tokens automatically recalibrate the quantity of those tokens to conform to the equation x*y=k, where x and y are the quantities of the two paired tokens, and k is constant. This means that even though you supply equal parts of two tokens to the pool, the quantities you receive when you reclaim your liquidity will change relative to the difference in the change in price of the two tokens when you remove the liquidity. If the price of x token goes up, and y token goes down, you will have less of x and more of y, and vice versa. If the price of both tokens goes up, or the price of both goes down, you will nonetheless have relative quantities of each token proportionately to the difference in the change of the price of x and y.