Dexhunter slippage
Dexhunter slippage
I’m interested in using DeFi instead of CeFi, so had a brief look at Dexhunter.
The ADA to DJED conversion for 100K ADA has a 6% slippage. This seems pretty high. I assume this means someone is offering their DJED for ADA with a 6% mark up. Is this how it works?
Do people actually sell their ADA for a 6% loss? This seems like a goldmine for DJED sellers! I’d have thought the 6% would be much lower, as DJED sellers fight over the ADA sellers.
Is this 6% slippage likely to lower during a bullrun, due to more liquidity being offered?
If USDC is enabled on Cardano, would USDC likely have a much better slippage?
Not an expert, but perhaps I can give you a good idea:
AMM DeXes (the majority on Cardano) find the price of the assets by the ratio of the amount of the two assets in the pool.
So if you have 1 djed and 1 ada, the price of 1 djed is 1 ada.
if you have 10 djed and 10 ada, the price is still 1 ada for 1 djed.
Now comes Peter that buys 1 djed with 1 ada. So he takes 1 djed and puts in 1 ada.
Now the pool has 9 djed and 11 ada. So the price is now (11/9) 1.22 ADA for 1 DJED.
Make sense right?