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58190241 No.58190241 [Reply] [Original]

I still don't understand how liquidity works. So there is a pot of money right. And if you buy a token you add to the liquidity. But how is the price determined of what you are buying? And is the supply part of the liquidity or something or where do the tokens actually come from?

Makes no sense how this works

>> No.58190269

>>58190241
If you buy a token you take liquidity out of the pool you retard lmao.


You pick a price you want to buy at you gigapleb.

>> No.58190271

>>58190241
Another top signal

>> No.58190289

>>58190241
It’s not a pot its an ordered list. And each token on that list has a specific selling price that the seller is willing to sell at.

Add up all the sell orders on that list and you get the total liquidity. Take that sum total, divide it by the number of coins on that list, then multiply it by the number of tokens in total and you get the market capitalization.

When you buy you can only buy tokens listed for sale obviously and the token at the bottom (lowest price) is the minimum price you can pay to buy. As you buy you are removing tokens from the list but the average price paid goes up which increases the average price on the list. This causes the sum total per token to increase which causes the market cap to increase. It works the opposite way when selling.

Does that make it clearer?

>> No.58190295
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58190295

>>58190241

>> No.58190299

I don't understand how price is determined for coins that only trade on Uniswap.

>> No.58190305

>>58190295
Oh shit. Thanks.

>> No.58190329

>>58190241
In the classic pool the 2 tokens in the pool are always worth the same, some if somebody adds one and takes one the price gets changed

>> No.58190335
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58190335

>>58190241
fellow retard here. BTC is at 70k right. I sell a bitcoin. I cash out. Where did that 70k come from?

>> No.58190351

>>58190289
This is wrong. You have described a traditional order book, like you might see on a cex. This is not how AMMs like Uniswap work

OP , imagine there is a liquidity pool containing 10 ETH and 10 shitcoin. The price of each shitcoin here will therefore be 1 ETH.
Somebody comes and buys a shitcoin - he deposits 1ETH into the pool, and withdraws 1 shitcoin.
The pool now contains 11 ETH and 9 shitcoin.
The new price of the shitcoin is now 11/9 = 1.22 ETH

This is ofc a highly simplified account. Tldr the price is determined by a mathematical formula which is based on the ratio of the shitcoin:eth in the pool

>> No.58190359

>>58190335
A retard bought it from you

>> No.58190372

>>58190351
The question was what is liquidity not how do I get scammed buying shitcoins.

>> No.58190382

>>58190241

The real question is, why re you here making stupid questions and dont getting MUMU. Just take it and see how liquidity works.

>> No.58190387
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58190387

>>58190382

Based

>> No.58190402

>>58190382

That bull never runs anon

>> No.58190409
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58190409

>>58190402

>> No.58190522

>>58190359
Yeah but in USDT presumably. I'm cashing out real USD to my bank. Somebody just gave me 70k usd from where? the block chain? Also where the hell goes my 70k usd if I'm the one who buys a bitcoin with my credit card in some exchange?

>> No.58190657

>>58190522
usdt is fully backed you retard

>> No.58190671

>>58190351
Yes this is a correct answer, a long version of>>58190329

>> No.58190722

>>58190289
>Take that sum total, divide it by the number of coins on that list, then multiply it by the number of tokens in total and you get the market capitalization.
This is wrong tho
Marketcap is just number of coins multiplied with last price.

>> No.58190747

>>58190722
In fact psyoping Bobos especially in 2022 have used the word liquidity very often completely wrong and in a confusing way.
Liquidity has nothing to do with marketcap, in fact a coin with low liquidity can rise easier and quicker

>> No.58190783

I like this thread but I don't have time to read it because I have to go poop

>> No.58190854

>>58190351
that is wrong but the guy you are replying to is correct

>> No.58190873

>>58190854
Literally no
Hes exactly described how uniswap v2 works
The guys he responded to described partially how CEX works which was not OPs question and then had a completely wrong definition of marketcap

>> No.58191067

So if a coin has liquidity of say 10K$ and I put in 10K I own all the coins on the market? What will happen when someone else wants to buy?

>> No.58191072

Is your expectation for the unending, permanent rape situation the same as mine?

>> No.58191506

>>58190873
Ops question is literally his first sentence:

>I still don't understand how liquidity works.

Now I understand how people like you lose all their money in bullmarkets.

>>58191067
If there’s 10k of liquidity it means 10k worth of token purchases are on the order books waiting to be purchased. If you were to sell off 10k of your tokens you would be removing liquidity from the pool. As you sell those tokens the liquidity drops and the market cap will adjust to again reflect the average purchase price of each of those tokens multiplied by the total number of tokens minted.

>> No.58193010 [DELETED] 

>>58191506
Are you retarded aswell you just id switching?
This guy >>58190351
gave a blatantly wrong and retarded definition of marketcap and you guys keep defending him?
OP asked not specifically about CEXes
>>58191506
>If there’s 10k of liquidity it means 10k worth of token purchases are on the order books waiting to be purchased. If you were to sell off 10k of your tokens you would be removing liquidity from the pool.
Well this is right for CEX, but uniswap works as the other guy explained, completely different.
>>58191506
>As you sell those tokens the liquidity drops and the market cap will adjust to again reflect the average purchase price of each of those tokens multiplied by the total number of tokens minted.
Not quite, the marketcap is the last price paid times supply, but if you make a big sell it might show what you said

>> No.58193022

>>58191506
Are you retarded aswell you just id switching?
This guy >>58190289
gave a blatantly wrong and retarded definition of marketcap and you guys keep defending him?
OP asked not specifically about CEXes
>>58191506
>If there’s 10k of liquidity it means 10k worth of token purchases are on the order books waiting to be purchased. If you were to sell off 10k of your tokens you would be removing liquidity from the pool.
Well this is right for CEX, but uniswap works as the other guy explained, completely different.
>>58191506
>As you sell those tokens the liquidity drops and the market cap will adjust to again reflect the average purchase price of each of those tokens multiplied by the total number of tokens minted.
Not quite, the marketcap is the last price paid times supply, but if you make a big sell it might show what you said

>> No.58193497

>>58190241
Liquidity is just the volume of transactions on a daily basis in dollar terms.
If your shitcoin has $500k in daily trading it’s going to be more difficult to cash out large sums of money.