Misconceptions
A few crazy misconceptions about liquidity pools and single token staking
- "Adding or Removing liquidity changes the price in the dex" - This is totally wrong! All that changing the liquidity will do is possibly allow more or less of that token to be used in future trades.
- "When someone trades selling A for B, the person who added liquidity in A is gaining a lot and the person who added liquidity in B is losing!" - This is again sooo wrong! Though someone has swapped some tokens, we don't lose track of who owns what and in how much. Adding liquidity in a single token is a simple concept, though underneath it is far more sophisticated. Have a go at the Bob and Jane Example
- "When I add liquidity to CaviarSwap V2.2 it is spreading my token value over all the tokens." this is wrong because we you are not buying into a percentage of the pool as a basket. When you supply a token as liquidity, you are locked into that tokens trading lifecycle and primarily are subject to that token.
- "CaviarSwap is a giant Multi-Token pool, which when a one token rugs it will drain all (or most) of the liquidity in the pool" Again this isn't true of CaviarSwap V2.2+ because you choose the tokens you want exposure to. For Non-XRD LP the only other token you could end up with is always XRD! When you add Liquidity in XRD, you pick the tokens you want exposure to!