Ray Swap is an automated liquidity protocol for creating liquidity and trading native tokens on Cardano. It eliminates trusted intermediaries and unnecessary forms of rent extraction, allowing for fast, efficient trading. Where it makes tradeoffs decentralization, censorship resistance, and security are prioritized.
Ray is open-source software licensed under MIT License.
Prices are determined by the amount of each token in a pool. The smart contract maintains a constant using the following function:
x*y=k. In this case
x = token0,
y = token1,
k = constant. For each trade a certain amount of tokens are removed from the pool for an amount of the other token. To maintain
k, the balances held by the smart contract are adjusted during the execution of the trade, therefore changing the price.