VWAP
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GnoSwap leverages the Volume-Weighted Average Price (VWAP) algorithm to provide accurate and temper-proof prices of tokens. The VWAP is calculated as the sum of the product of price and volume for each trade within the specified time frame, divided by the total volume:
Implementing VWAP to token prices comes with multiple advantages.
High Accuracy: Weighting the exchange rate by volume traded allows VWAP to accurately reflect the prices at which the token was traded, deriving a price that closely tracks market behavior.
Price Manipulation Resistance: Manipulating a VWAP-based price is highly difficult, as it would require a market-wide manipulation with tremendous volume at unfavorable rates against liquid assets, leaving the attacker vulnerable to arbitrage.
Wide Coverage: VWAP is highly scalable, providing prices to any token that is paired with reputable assets without reliance on third-party Oracle integrations.
VWAP is a secure, proven pricing algorithm adopted by leading data providers including ChainLink and CoinGecko. To further prevent price manipulations, GnoSwap only accounts for trades against reputable, verified assets with sufficient market liquidity. The liveliness of prices is ensured by setting the time frame to only include fresh, recent data.