Harmonizing the Price of EGC on EgoPay and MXEC Platforms

Egoras
3 min readOct 10, 2023

With the invaluable support of our dedicated community, we proudly introduced “EGOPAY” — our payment platform enabling seamless product purchases with $EGC. The ongoing sales event serves as a resounding testament to the groundbreaking nature of this platform. Every transaction is seamlessly converted to EGC at the prevailing swap rate. This dynamic implies that as long as there is a demand for our products, there will invariably be a corresponding demand for $EGC.

Understanding the Mechanism of EgoPAY’s Swap Process

EgoPay employs an Automated Market Maker (AMM) algorithm to establish the value of EGC, which has led to disparate pricing on MXEC and in the swap market.

The AMM framework encompasses a pricing algorithm, the specifics of which may differ across various exchanges. EgoPay Swap, for instance, relies on the widely recognized formula: x * y = k, where x represents the quantity of the first asset within the liquidity pool, y signifies the amount of the second asset, and k remains a constant value.

This algorithm enables AMMs to facilitate equitable transactions between parties, operating without the need for an order book. As a result, AMMs have significantly bolstered the liquidity of various coins and tokens within the realm of cryptocurrencies.

However, the absence of a counterparty logically raises questions about market makers. The answer lies in liquidity providers (LPs), who play a pivotal role in facilitating market making without a direct counterpart.

What Is a Liquidity Pool?

Liquidity pools comprise capital supplied by liquidity providers who receive compensation for their contributions, serving as an incentive to maintain liquidity within these pools. The specific funding criteria may vary across different exchanges. For instance, in the case of EgoPay Swap, when liquidity providers deposit two types of tokens, they typically allocate approximately 50% of each.”

Liquidity providers (LPs) engage in this process to ensure an equitable balance of the two types of tokens within the pool, thereby upholding the validity of the AMM formula. To elucidate, if ‘y’ were to equal 0 in the equation x * y = k, then k would be 0, resulting in an untenable scenario — implying an absence of tokens for the ‘y’ variable.

Becoming a liquidity provider grants one the status of a market maker, accessible to anyone. LPs receive 0.3% of transaction fees, in addition to token rewards, rendering liquidity pools an attractive avenue for generating a stable income. Within the EgoPay ecosystem, liquidity providers enjoy equitable shares. Consequently, regardless of the amount deposited into the pool, rewards are distributed at a consistent rate, ensuring fairness across all participants.

EgoPay Liquidity Pool

Egopay’s initial liquidity pool, the Naira & EGC pool, was strategically launched to align with the predominant use of Naira for all transactions. Consequently, all available liquidity is denominated in Naira, a currency primarily relevant to Nigerian users. To broaden accessibility for an international audience, the team is planning to introduce an EGC & USDc pool. This strategic move aims to facilitate onboarding for non-Nigerian users. The team is diligently working on a 21-day timeline to ensure a seamless transition in pricing dynamics following the integration of the EGC & USDc pool, collaborating closely with arbitrageurs for optimal results.

How will the price on Mxec and Egopay get harmonised

When the price of $EGC on Egopay falls below that on mxec, arbitrageurs are incentivised to buy EGC at the lower price on mxec, and then sell it on EGOPAY at a higher rate, eventually equalizing the prices. Conversely, if the price on Egopay is lower than that on mxec, arbitrageurs are incentivised to buy on Egopay at a lower rate and sell on mxec at a higher price.

Additionally, liquidity providers receive trading fees and daily $EGC rewards for contributing liquidity on the Egopay Swap platform.

For any questions, please feel free to reach out to us on:

Website: https://egoras.com/
Telegram: https://t.me/egorashq
Twitter: https://twitter.com/egorashq
Medium: https://egoras.medium.com/

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