0

I've made a contract which basically do an arbitrage between two exchanges. What I couldn't understand it is that in AMM whenever the liquidity gets increased or decreased the price gets fluctuated. But that's not what's happening with any of the Exchange likewise

  • asset A in Uniswap has a price of 1 ETH
  • asset A in Uniswap purchased by 1,000,000 ETH

Uniswap got new 1,000,000 liquidity for an asset and it's price gets increased. but when i see this after investing 1,000,000 from flashloan it doesn't affect a price for even bit. How is this possible.

Does flashloans not added into the liquidity because the liquidity pool gets increased but it doesn't affect the price.

Improve this question
2
  • Do you use oracles for the price? Uniswap has TWAP oracles. The spot price should change a lot, TWAP not so much.
    – kfx
    Commented Aug 25, 2022 at 13:18
  • No, I'm not using oracle for prices but I'm more interested can a flashloan change the price of token
    – Saad Suri
    Commented Aug 25, 2022 at 18:44

1 Answer 1

Reset to default
0

In liquidity pool price fluctuate when you add liquidity or remove liquidity. the reason behind this fluctuation is "Slippage". If you feel price at swapping increasing e.g. at 1eth swap price increasing, so try to swap 0.000001 ETH now you'll see price fluctuation will be 0 or no increment. Therefore in real world scenario, In Pool investor or DEX owner add liquidity in Millions to get safe from this fluctuation.

Improve this answer

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.