Exercise 7: DEX Usage and AMM Analysis

⏰ Time Investment: 30-45 minutes 🎯 Goal: Understand DEXs and AMM mechanics

📚 Required Reading Integration 📖 Primary: Lesson 7: Decentralized Exchanges

🔍 Phase 1: Knowledge Check (15 minutes)

1. What is an AMM?

• Your answer: _________________________________

2. What is the constant product formula?

• Your answer: _________________________________

3. How do liquidity pools work?

• Your answer: _________________________________

4. What is price impact?

• Your answer: _________________________________

5. What risks do liquidity providers face?

• Your answer: _________________________________

📊 Phase 2: Calculation Practice (15 minutes)

Given a pool with:

• 100 ETH

• 200,000 USDC

• k = 20,000,000

Calculate:

• Current price

• Price after buying 1 ETH

• Price impact

💡 Phase 3: DEX Comparison (15 minutes)

Compare:

• Uniswap vs. centralized exchanges

• When to use DEXs vs. CEXs

• Benefits and drawbacks of each