Coding Towards The Answer, Part 14
Simulate …
Liquidity providers deposit funds into a liquidity pool. This pool powers a marketplace where users can lend, borrow, or exchange tokens. The usage of these platforms incurs fees, which are then paid out to liquidity providers according to their share of the liquidity pool. AMM (Automated Market Maker) is a start of an application to replace middlemen, like traders, lawyers, financial analysts, etc.
For any AMM or digital currency platforms to gain espousal or adoption,
network effect encompasses the liquidity of its market, the number of people who own it, and the community of developers maintaining and improving upon its software and its brand awareness and confidence. Large investors, including nation-states, will seek the most liquid market so that they can enter and exit the market quickly without affecting its price. Developers will flock to the dominant development community reinforcing the strength of that community.
Let’s simulate Defi.
import random
# Define the liquidity pool
liquidity_pool…