Overview

NostraSwap functions similarly to other AMM in which traders can swap a token to a different token paying a small fee for every swap. However, in addition to the amount of tokens the trader gets based on the product invariant, the trader also has a chance to get a bonus amount of token if there is an arbitrage opportunity between NostraSwap and UniswapV2/SushiSwap. 10% of the arbitraging profit goes to the trader, while the rest goes to the liquidity pool. In addition, the price oracle is free for any protocol to use.

Oracle

NostraSwap provides other DEFI protocols with a secured and fresh oracle price by separating the oracle price from the market price. The oracle price follows the market price in such a way that it is limited to change a predetermined percentage per second. We call this “Limited Price Impact Oracle”. See Oracle Section.

The price is represented as a 112x112 fixed-point number and is updated every second. Protocols that wish to use the price oracle can access it through the getOraclePrice methods in the Pair contracts. See Oracle Integration Section.

Arbitrage

NostraSwap also implements a built-in post-swap arbitrage to eliminate arbitrageurs from the platform and split the arbitrage profit between trader and liquidity providers. While liquidity providers and traders are contributing to the protocol, arbitrageurs are merely capturing the opportunities that could otherwise go to those that contributed. For arbitrage condition and math, see Arbitrage Section.