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In my last post, I shared how AMMs (like PancakeSwap) run on a simple formula:
🧮 X × Y = K — price changes when token balances shift.
And not long after writing that… I saw this:
📉 One giant red candle, followed by a bounce.
(Screenshot below from a pool I was watching)
What likely happened:
🐳 A big trader made a massive swap in a pool with shallow liquidity.
→ The price dropped sharply
→ Then recovered as others reacted
→ That’s AMM math in real life — prices moving with every trade.
As someone who’s learning and preparing to become a liquidity provider, this was a good reminder:
✅ Small pools = good potential for fee income
⚠️ But also = higher risk of sudden price swings
⚠️ And exiting during a dip can mean impermanent loss
It’s one thing to read about how AMMs work.
But seeing this on the chart made the theory more real and practical.
Have you ever watched something like this unfold?
Or had a similar moment where DeFi mechanics suddenly made sense?
Would love to hear your take.
#DeFiFromZero #DeFiBeginner #DeFiLearn #DeFiLearn
🧮 X × Y = K — price changes when token balances shift.
And not long after writing that… I saw this:
📉 One giant red candle, followed by a bounce.
(Screenshot below from a pool I was watching)
What likely happened:
🐳 A big trader made a massive swap in a pool with shallow liquidity.
→ The price dropped sharply
→ Then recovered as others reacted
→ That’s AMM math in real life — prices moving with every trade.
As someone who’s learning and preparing to become a liquidity provider, this was a good reminder:
✅ Small pools = good potential for fee income
⚠️ But also = higher risk of sudden price swings
⚠️ And exiting during a dip can mean impermanent loss
It’s one thing to read about how AMMs work.
But seeing this on the chart made the theory more real and practical.
Have you ever watched something like this unfold?
Or had a similar moment where DeFi mechanics suddenly made sense?
Would love to hear your take.
#DeFiFromZero #DeFiBeginner #DeFiLearn #DeFiLearn
⚖️ AMM: That Weird DeFi Pool Where Math Runs the Show
When I first heard about liquidity pools, I imagined a tropical oasis where tokens go to chill and earn passive income. 🏖️
Reality? It's more like a math gym where tokens are forced to work out… forever.
Or better yet — imagine a swimming pool, split into two lanes:
🐤 One side full of yellow ducks (say, USDT),
🍓 The other — berries (like ZKJ).
Every time someone jumps in to grab more ducks, they have to leave berries behind to keep the balance.
More ducks out = fewer berries = price shift. And the pool doesn’t complain — it just recalculates.
That’s how AMMs work:
🧮 X × Y = K
X and Y are the two tokens in the pool. K is the magic number that stays constant.
When someone swaps one token, the ratio changes, and boom — the price adjusts.
So when someone swaps USDT for ZKJ, the pool’s like:
“Fine, take your ZKJ, but next time it’ll cost you more.”
(Market dynamics, with passive-aggressive flair.)
Seeing it this way helped me realize:
DeFi isn’t magic — it’s just transparent math.And that’s weirdly empowering for someone who still counts on fingers.
Next post I’ll dig into yield — because apparently, these pools don’t just rebalance ducks and berries… they also pay you. Stay tuned 🐣
🟡 What helped you understand AMMs? Got a better metaphor?
Drop it in the comments!
---------
#DeFiJourney #CryptoBeginners #DeFiLiquidity #LearnDeFi
Reality? It's more like a math gym where tokens are forced to work out… forever.
Or better yet — imagine a swimming pool, split into two lanes:
🐤 One side full of yellow ducks (say, USDT),
🍓 The other — berries (like ZKJ).
Every time someone jumps in to grab more ducks, they have to leave berries behind to keep the balance.
More ducks out = fewer berries = price shift. And the pool doesn’t complain — it just recalculates.
That’s how AMMs work:
🧮 X × Y = K
X and Y are the two tokens in the pool. K is the magic number that stays constant.
When someone swaps one token, the ratio changes, and boom — the price adjusts.
So when someone swaps USDT for ZKJ, the pool’s like:
“Fine, take your ZKJ, but next time it’ll cost you more.”
(Market dynamics, with passive-aggressive flair.)
Seeing it this way helped me realize:
DeFi isn’t magic — it’s just transparent math.And that’s weirdly empowering for someone who still counts on fingers.
Next post I’ll dig into yield — because apparently, these pools don’t just rebalance ducks and berries… they also pay you. Stay tuned 🐣
🟡 What helped you understand AMMs? Got a better metaphor?
Drop it in the comments!
---------
#DeFiJourney #CryptoBeginners #DeFiLiquidity #LearnDeFi
💫 Starting from Zero: My DeFi Journey Begins
I'm not a pro and I'm not here to give financial advice.
I'm just someone who's genuinely curious about how DeFi works — and decided to figure it out step by step.
No technical background. No secret strategies. Just real questions, real progress, and a clear goal:
🔅 Understand what liquidity provision actually means
🔅 Learn how people earn (and lose) in DeFi
🔅 Build a system that I can trust and use confidently
This post is part of my learning log. I share it mainly to stay focused, reflect, and track my growth.
If you're also exploring this world — you're welcome to walk beside me.
Let's build clarity — not just hype. 🔍
---
#DeFiJourney #CryptoBeginner #Web3Learning #DeFiFromZero #nofinancialadvice
I'm just someone who's genuinely curious about how DeFi works — and decided to figure it out step by step.
No technical background. No secret strategies. Just real questions, real progress, and a clear goal:
🔅 Understand what liquidity provision actually means
🔅 Learn how people earn (and lose) in DeFi
🔅 Build a system that I can trust and use confidently
This post is part of my learning log. I share it mainly to stay focused, reflect, and track my growth.
If you're also exploring this world — you're welcome to walk beside me.
Let's build clarity — not just hype. 🔍
---
#DeFiJourney #CryptoBeginner #Web3Learning #DeFiFromZero #nofinancialadvice
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