The liquidity pool will allow anyone to easily convert Noso to other "tradeables" currencys.
As any other liquidity pool, as more Noso you sell, lower price you will get. In the other hand, as more Noso you buy, bigger price.
A liqpool is a way to provide monetisation to a crypto project while offering an accurate market price. It works with liquidity reserves supplied by users.
Anyone can be part of the liquidity pool earnings (0.5% for buys and sells, but it could be modified in the first days) adquiring shares.
Starting point of the liquidity pool will be ~2% of the total marketcap to make a solid representation of the project value.
How does it work?
Anyone can fund a liqpool. Both currencies must be supplied in proportion to the currently available fund of the pool. The first person funding the pool sets the starting relation (price). In Noso, this was done with 30,000 Noso and 1,800$, setting the starting price to 0.06 US$ per Noso. There is also a minimum required to provide funds (1/100 of starting funds on Noso liqpool) called "share".
Anyone can fund the pool at any moment, providing a share proportion of both currencies.
Example: The Liqpool is funded with 138,982 Noso and 6,791 $ (setting a respective price of 0.04889 $ per 1 Noso) in 198 shares. The share value is calculated by dividing the supplied funds between the number of existing shares:
138,892 Noso / 198 = 701.474 Noso 6,791 $ / 198 = 34.297 $ Hence, the price to mint a new share in this example is 701.474 Noso and 34.927$. Once the user pays, those coins are added to the liqpool, creating a new share: 138,892+701 = 139,593 Noso 6,791 +34 = 6,825 $ 198+1 (the just minted) = 199 shares And price remains identical (6,825 / 139,593 = 0.04889)
Now the liquidity provider owns 1/199 of the whole pool funds, not a fixed amount. It means that when he "burns" his share(s) (exchange it for Noso and USD), he will receive the proportional part, not an identical quantity.
Liquidity providers do this to:
Get a proportional part of ALL the trade fees in the pool.
Provide stability to the coin price.
Decrease the circulating supply to reduce the offer and increase the price.
Example based on last trade escrowed
(100) is the total number of shares in the pool. So, each share value is: 300 Noso and 18 nUSDo
The user gets and instant preview of any desired trade. In the following example, he want sell 1000 Noso, and he receives the preview of the transaction: Average Price per Noso and variation in percentage Total nUSDo to be deducted from pool. Fee of the operation (in the example is set to 1% to make it easier to understand) nUSDo to be credited to the user account.
The Fee (0.58120399 nUSDo) above are divided evenly between the holders of the pool shares.
After the trade: There are more Noso and less nUSDo on pool, so new price is lower. (0.05618966)
Here the same user buying back the 1000 Noso
A liquidity pool protect the price against coin dumpers.
