PMM Algorithm

Overview

The PMM(Proactive Market Maker) algorithm is an inventory management strategy. When the quantity of a certain asset becomes low, the PMM algorithm will automatically increase the quotation of this asset in the hope of buying back the missing inventory from the market.

Using Canister to Providing liquidity

ICPEx has implemented the canister version of the PMM algorithm. The concept of orders does not exist in canister, but is replaced by the supply and consumption of liquidity.

Put the funds into the canister and set the parameters to realize the supply of liquidity. Trading assets directly with canister completes the consumption of liquidity. In this process, the capital pool exists as a counterparty to all users.

Trading Fees

In the current version, trading fees use the asset class received by the trader. For example, if a user uses ICP to buy IEX, IEX is paid to the liquidity pool as a trading fee. If the user uses IEX to buy ICP, the ICP is paid to the liquidity pool as a trading fee.