Overview

This document provides a comprehensive guide on the operation and functionality of the Automated Market Maker (AMM) within our game. The AMM is designed to facilitate the exchange of in-game resources, such as gold and disk orbs, through a decentralised and player-driven mechanism. This system enhances the game’s economy by allowing players to trade directly without central authority, using liquidity pools to ensure seamless transactions.

AMM Components and Functionality

1. User Interface (UI)

The AMM functionality is accessible through the “AMM trading console” located in the bank within the game. This console provides a user interface (UI) where players can engage in various types of transactions, including swaps and liquidity provision.

Swap UI

• Order Types: Players can choose between “instant” and “limit” orders. An instant order executes immediately at the current market rate, while a limit order executes when the resource reaches a specified price.

• Resource Selection: Players select the resources they wish to trade, such as swapping gold for discorbs.

• Slippage Setting: Players can set a slippage tolerance, which is the maximum price change they are willing to accept during the transaction. This protects against price volatility between the time an order is placed and when it is executed.

2. Liquidity Pools

Liquidity pools are fundamental to the AMM’s functionality, allowing for the decentralized trading of resources.

Pool Interaction

• Players can add resources to a liquidity pool in exchange for liquidity tokens. These tokens represent the player’s share of the pool and can be used to claim a portion of the transaction fees generated by the pool.

• The initial setup of these pools is controlled by the game developers, and currently, only certain pools are available.

Rewards System

• Liquidity providers earn rewards from the transaction fees generated by the trading activity in their pool. These rewards are distributed in the form of “gold bonds,” which are a special in-game currency that can be redeemed at specific vendors in the game.

3. Transaction Fees and Rewards

Each liquidity pool has an associated transaction fee, set experimentally by the developers. These fees are split among the liquidity providers according to their share in the pool.

• Fee Example: If a trade involves a fee of 10 gold, this amount is distributed to liquidity providers based on the amount of liquidity they have provided to the pool.

• Gold Bonds: Smaller transactions that generate fractional amounts of gold are resolved by issuing gold bonds, which aggregate these fractions into a redeemable currency.

4. Removing Liquidity

Players can choose to remove their resources from the liquidity pool at any time. This action burns the corresponding liquidity tokens and returns the player’s contributed resources based on the current pool ratio.

5. Limit Orders

Limit orders allow players to specify a price at which they wish to execute a trade. This feature is particularly useful for players who want to trade at specific price points, providing more control over their trading strategy.

• Execution: A limit order is monitored by the system, and once the target price is reached, the order is automatically executed, converting the specified resources at the agreed-upon rate.

Additional Features and Considerations

Real-Time Data

Players can access real-time data on resource prices and pool statuses through the game’s dedicated web portal. This feature allows for informed decision-making and strategic planning in resource management.

Future Developments

The AMM system is currently in an experimental phase and not yet implemented on the blockchain. Future plans include transitioning to a testnet to explore further economic impacts and potentially expanding the available types of liquidity pools.

## Conclusion

Our in-game AMM is a complex yet intuitive system that offers players autonomy over their resources, encouraging a dynamic and player-governed economy. By participating in the AMM, players not only enjoy a richer gaming experience but also contribute to the stability and liquidity of the game’s economy. This system represents a significant step towards integrating advanced financial mechanisms into virtual environments, providing both utility and engagement for players.