Pallet Pablo provides extensive functionality to set up an exchange, enabling users to create, swap assets with, and manage liquidity pools.
Pablo's is based on the balancer protocol in terms of liquidity pool mechanisms. The balancer protocol at its core is an automated market maker and can be described in simple terms as a price balancing asset exchange. Balancer AMM: built on the constant product formula, balancer functions similar to Uniswap but applies adjustable weights to set a price difference at pool initialization.
We start by calling the create function to initiate the configuration of a constant product pool.
Once liquidity is provided to the pool, the following transactional functions become accessible:
buyswapTwap(time-weighted-averaged-price)
and basic liquidity pool management functions:
add_liquidityremove_liquidity
Users can also conduct specified swap operations by composing instructions with at least one currency pair.
The TWAP is a counter mechanism aimed to prevent and discouraging malicious actors. Specifically, from making large trades to manipulate the reflected price of the liquidity pool and exploit the price momentum in smart contracts using the new price.