AMM 101

1. Identify FT on Flow

Unlike on EVM, simply using a contract address is not enough to identify FTs on FVM. The unique identifier for FT is composed of: A.16-byte-address.name.

For example:

• A.b19436aae4d94622.FiatToken is USDC's unique identifier on mainnet.

• Also ceWETH and ceWBTC (Celer-Bridged wETH & wBTC from ETH) are deployed under the same address but with different identifiers: A.231cc0dbbcffc4b7.ceWETH, and A.231cc0dbbcffc4b7.ceWBTC.

2. Interact with FT on Flow

Paths

FT on FVM conforms to the FungibleToken interface. One specific FT is represented as a Vault resource and stored directly under the holder' account storage area.

So each FT is also associated with several paths used to interact with it. Check the tokenlist file here for FT details on mainnet.

FT Resource Initialization

Unlike FT on EVM, one cannot 'airdrop' FT to arbitrary address without the receiver account first initializing the FT resource once (using FT.createEmptyVault() method).

• Example transaction: init_usdc_vault.cdc

import FungibleToken from 0xf233dcee88fe0abe  // mainnet
import FiatToken from 0xb19436aae4d94622      // mainnet

transaction() {
    prepare(signer: AuthAccount) {
        let vaultPath = /storage/USDCVault
        let receiverPath = /public/USDCVaultReceiver
        let balancePath = /public/USDCVaultBalance

        if signer.borrow<&FungibleToken.Vault>(from: vaultPath) == nil {
            signer.save(<- FiatToken.createEmptyVault(), to: vaultPath)
            signer.link<&FiatToken.Vault{FungibleToken.Receiver}>(receiverPath, target: vaultPath)
            signer.link<&FiatToken.Vault{FungibleToken.Balance}>(balancePath, target: vaultPath)
        }
    }
}

The initialization only needs to be done once per holder account for one specific FT. After that any further action like: deposit / withdraw / etc. can be performed flawlessly.

*Note: FlowToken is also FT but it's the only exception that it doesn't need initialization - as the init step has been performed when the account is created.

3. CPAMM Principles

Check Uniswap-V2 whitepaper here: https://uniswap.org/whitepaper.pdf

4. Understanding Impermanent loss (IL)

Source: https://docs.uniswap.org/protocol/V2/concepts/advanced-topics/understanding-returns