When using DEX, we will see large or small slippage every time we trade, and when we use Uniswap, SushiSwap, MDEX and other decentralized exchanges to invest, we need to have a certain perception of the size of the liquidity pool .
If the LP is too small, the risk of this investment opportunity is very high. If we encounter each transaction, we will query the liquidity pool information of the relevant transaction pair (for examplehttps://info.uniswap.org/secondary title
Example 1:
We specifically look for an example of Whale, a currency that has been popular recently but has a small volume. Whale-USDT, and then enter a random number here in USDT, such as 10000USDT. At this time, the slippage is 1.04%. At this time, you can use a calculator to calculate: 10000÷1.04%*2=1.923 million US dollars.
But this calculation still requires a calculator, then, directly adjust the USDT number manually until the slippage is displayed as 1%, as shown in the figure below:
Here is a direct calculation: 9600*200=1.92 million US dollars.
It can be seen that the exchange path is Whale is first exchanged for ETH, and then ETH is exchanged for USDT, but it does not affect, because the slippage between ETH and USDT is very small, which does not affect the final result. Let's take a look at the size of the actual liquidity pool:
https://info.uniswap.org/pair/0x4fda00d490c1c05ff15d7313d1cebe9c711e434b
It is very consistent with the oral calculation figure of 1.92 million US dollars. This calculation method is calculated based on the basic principles of AMM automated market makers.
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Example 2:
The initial input is still 10,000 USDT. At this time, the calculator can calculate 10,000÷1.2%*2=1.66 million US dollars, but a better and more accurate method is to spend three seconds to test several numbers. Now the slippage is greater than 1% and changed to 8,000. I still changed it to 7000, and then saw a slippage of 0.99% at 7200, which is close to 1%.
Calculation: 200 times 7200 US dollars, equal to 14400 US dollars, this is the locked position.
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Summary method:
Simply adjust the exchange amount (USDT) in three seconds to make the slippage approach 1%, and then 200 times the exchange amount is the size of the entire liquidity pool.
For example, for $1,000, the slippage corresponds to exactly 1% (1.01% or 0.99% is also acceptable), then the size of the target liquidity pool is $200,000.
This method can be used in an extremely fast way to judge the liquidity of the encrypted assets you are exchanging. If the pool is small and less than 100,000 US dollars, then the risk of this trading pair is currently very high. Moreover, if you insist on investing in an encrypted asset, it is recommended not to exceed 1% (up to 3%) in one-time exchange. Otherwise, even if the price remains unchanged, you will already suffer a lot of losses with USDT or ETH and other common exchanges. up.
If you join the LP liquidity pool for mining, you can simply calculate the increase or decrease of your total funds based on the current "target" price, please read:
《An easy way to calculate the changes in your own LP liquidity pool funds》
