What Are Diesel Pools?

Diesel Pools are decentralized liquidity pools on the Hive Blockchain. They allow users to trade tokens directly on-chain without needing a centralized exchange. A Diesel Pool is a pair of two different tokens, and users can swap between them at a rate determined by the liquidity in the pool. Anyone can provide liquidity to these pools by depositing tokens, and in return, they earn a portion of the fees generated by token swaps.

How Do Diesel Pools Work?

Diesel Pools operate through an automated market maker (AMM) system. When you swap tokens in a pool, the price is adjusted based on the current ratio of tokens in the pool. For example, if there is more of Token A than Token B in a pool, Token A will be cheaper, and Token B will be more expensive. The goal is to keep a balance of both tokens.

When you provide liquidity to a Diesel Pool, you deposit an equal value of both tokens in the pool. In return, you receive liquidity tokens, representing your share of the pool. As users trade within the pool, a small fee is charged on each transaction, which is distributed proportionally to liquidity providers.

Why Use Diesel Pools?

There are several advantages to using Diesel Pools on the Hive blockchain:

• Decentralized Trading: Unlike traditional exchanges, Diesel Pools do not require a centralized authority to manage trades. This ensures that all swaps happen directly on the blockchain.
• Earning Passive Income: By providing liquidity to a Diesel Pool, you can earn a portion of the transaction fees each time someone trades using the pool.
• Flexible Token Pairs: Diesel Pools allow for a wide range of token pairs, enabling users to create and trade pairs that may not be available on centralized exchanges.

How to Use Diesel Pools?

Using Diesel Pools is simple:

• Choose a Pool: Select a Diesel Pool that contains the tokens you want to trade or provide liquidity for. For example, the CCD:SWAP.HIVE pool allows you to trade between the CCD token and SWAP.HIVE.
• Add Liquidity: If you want to earn fees, you can provide liquidity to the pool by depositing an equal value of both tokens (e.g., CCD and SWAP.HIVE). You’ll receive liquidity tokens representing your share of the pool.
• Swap Tokens: To trade tokens, select the pool you want to use, input the amount you want to swap, and the system will calculate the exchange rate based on the pool’s current liquidity.
• Withdraw Liquidity: If you want to exit the pool, you can withdraw your liquidity at any time, along with any fees you’ve earned.