Quote:
Originally Posted by JohnnyB
You can think of the buyer as the liquidity pool itself. A liquidity pool is like having an account that is already full of money, and the account is automated so that you can just swap your tokens for the money in the account. The rate at which you can swap is constantly being automatically adjusted as a function of how much money is in the account and the demand for the tokens.
If nobody wants the tokens and so everyone is trying to sell them into the pool, then the pool can just run out of money, just like a run on a bank. At that point, the tokens are basically worthless until some demand for them is generated again and some people are willing to start buying them from the pool and providing liquidity again.
But, as long as there is demand for the tokens and the pool doesn't just get drained of money then buying or selling from the pool is very fast because you're just doing a direct swap with what the pool already holds.
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to be honest that just sounds insane, a locked in death spiral