Hacker News new | ask | show | jobs
by KomradeKeeks 1517 days ago
In this context it means: -system is built with bearer-style assets in mind to handle liquidations without having a 'negative' balance (so instead of a margin call, onus is on the user to track prices and refill liquidity, otherwise the system liquidates the position to pay back the other market participants involved) - Anyone can put money in this - the smart contracts use other automated markets like AMMs (think of it like a two-way vending machine between Twix and M&M's, where one can set the price between two assets based on how many units of Twix and M&M's they put in initially, and people can trade into and out of them by putting one in, and getting the other. The people who put in both provide liquidity, and they get a portion of the trading fees. These two-way vending machines are set up so that if someone puts a ratio of Twix/M&M's in their vending machine that doesn't match the market price, someone can just arbitrage that out so that the price matches the market. It's like finding the cheapest place to get food