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Liquidity Providers (LPs)
Liquidity is extremely important to the weiWard platform.
While transactions occurring on the weiWard platform necessarily reference current ETH gas prices during ETH/ETHtx swaps, insufficient liquidity on exchanges creates the possibility that exchange trading ETH gas prices deviate significantly from currently observable ETH gas prices used by the weiWard platform. If significant differences between currently observable ETH gas prices and exchange-implied ETH gas prices persist, weiWard platform insolvency risk increases proportionally with arbitrage opportunities.
Liquidity providers ensure the price impact of buying and selling of ETHtx tokens is minimal - fostering agreement between currently observable ETH gas prices and exchange-based ETHtx prices by providing liquidity to absorb demand volatility.
Last modified 2yr ago