Primitive Knowledge Base
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Frequently Asked Questions
Does Primitive have a token?
No. Primitive does not have a token.
What is Primitive?
Primitive is an automated market maker ("AMM"), a type of decentralized exchange that is used to trade tokens.
What is an Automated Market Maker?
Automated market makers are a type of decentralized exchange for swapping tokens using mathematical pricing rules.
Primitive's AMM is a special type of exchange called a Replicating Market Maker ("RMM"). The main difference between regular AMMs and RMM is that the price of a token in an RMM pool will get closer to the pool's strike price over time, called liquidity compression.
What is a Replicating Market Maker?
RMMs hold all deposited tokens in replicating portfolios, which are a basket of assets designed to track a target payoff.
Primitive RMM-01 is designed to replicate the payoff of a covered call option.
What makes Primitive different from other AMMs?
Primitive is designed with the liquidity provider in mind.
Liquidity providers choose the price their tokens are sold at, if the tokens ever reach that price during the pool's lifetime.
In other AMMs, tokens are constantly sold when their price goes up and bought when their price goes down.
What markets are available on Primitive?
A pool can be deployed for any token pair by anyone because the Primitive smart contracts are permissionless.
Does Primitive use price feeds from oracles?
No. Primitive is not dependent on any external price feeds.
Does the Primitive team control the protocol?
No. There are no administrative functions that exist in the Primitive RMM smart contracts.
Does the Primitive team take fees from the protocol?
No. The protocol is free to use. Fees are taken from token swaps and are only distributed to the depositors of the pool.
What risks are there when using Primitive?
There is a risk that deposited tokens are sold for the strike price of the pool, effectively selling early.
There is a risk that no trading fees are earned because no trades occurred in the pool.
The smart contracts are audited by five professional security firms, however, smart contract risk is always present and caution should be exercised at all times when interacting with decentralized products.