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  • What is SEGA?
  • Getting Started
    • Quickstart
    • Swapping
      • Swap FAQ
    • Provide Liquidity
      • LP FAQ
    • Creating a Pool
      • SEGA Pool Creation & Ecosystem FAQ
  • Protocol
    • SEGA Protocol
    • Protocol Fees
    • Key Addresses
    • Social Media
    • Audit
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  1. Protocol

SEGA Protocol

SEGA: A Unique AMM Platform

SEGA is a decentralized protocol designed to power lightning-fast trades, permissionless pool creation, and innovative yield-earning opportunities, making it the first and most decentralized AMM on Sonic SVM.

Unlike traditional AMM platforms, SEGA operates as an AMM V2, providing on-chain liquidity that enhances the overall trading experience. This integration allows SEGA’s users and liquidity pools to access deeper liquidity and faster transactions. Powered by Sonic SVM, SEGA ensures improved execution efficiency, making it a superior choice for users seeking seamless and efficient trading.

Liquidity Model: Constant Function K = Y * X

SEGA currently employs the constant function K = Y * X, which has the unique property of being stateless. This means that given any two tokens, without requiring information about their relative prices or values, SEGA can provide “infinite” liquidity to traders.

When users exchange token 𝑥 for token 𝑦 , the actual amount of 𝑦 received is:

yfinal=y×Δxx+Δxy_{\text{final}} = \frac{y \times \Delta x}{x + \Delta x} yfinal​=x+Δxy×Δx​

where Δ𝑥 is the amount of token 𝑥 paid by the user.

Liquidity Provision and LP Tokens

  • Liquidity Injection: Users provide two tokens (e.g., Token Sega and Token USDC) in proportion and deposit them into the pool.

  • LP Tokens: Liquidity providers (LPs) receive LP tokens representing their share in the pool. These LP tokens can be redeemed for the principal and earned fees.

  • Impermanent Loss Management: Like Uniswap V2, LPs may face impermanent loss risks when the prices of tokens in the pool fluctuate.

Incentives for Liquidity Providers

  • Trading Fee Rewards: Liquidity providers earn rewards from trading fees by contributing liquidity to SEGA pools.

  • Farming Rewards (coming): Key liquidity pools are incentivized with farming rewards to attract more participation.

  • Customizable Rewards: Projects can add additional reward tokens to encourage liquidity provision.

Empowering New Projects

New projects can use SEGA to:

  • Create Trading Markets: Launch new trading markets effortlessly.

  • Provide Immediate Liquidity: Ensure their tokens have liquidity from day one, enabling traders to buy in easily.

By utilizing SEGA, projects can quickly establish a functional market and attract users, creating a seamless experience for both liquidity providers and traders.

Powered by Sonic

The underlying Sonic SVM enhances SEGA’s capabilities with its unmatched speed and efficiency, ensuring a smooth and cost-effective trading experience for all users.

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Last updated 1 month ago