Swaps

Swaps in Sonus are different from trades on traditional platforms. Sonus does not use an order book to represent liquidity or determine prices. Sonus uses an automated market maker mechanism to provide instant feedback on rates and slippage.

The automated market making algorithm used by Sonus revolves around the constant product formula x*y=k, where k is the invariant.

Each pair on Sonus is actually underpinned by a liquidity pool. Liquidity pools are smart contracts that hold balances of two unique tokens and enforces rules around depositing and withdrawing them.

When either token is withdrawn (purchased), a proportional amount of the other must be deposited (sold), in order to maintain the constant.

Liquidity provider fees

There is a default 0.3% fee ( this can vary based on the assets in the pair ) for swapping tokens. This fee is distributed in two different ways: - Staked LP : Fees are added onto the pool's gauge where they will be distributed to gauge veSONUS voters at the end of the epoch; - Unstaked LP : Fees go straight into the liquidity provider's position when a swap occurs.

For unstaked LPs this increases the value of liquidity tokens, functioning as a payout to these liquidity providers proportional to their share of the pool.