# Trade asset tokens and ISS tokens

Each of the ISSUAA asset tokens as well as the ISS token can be traded on the ISSUAA market place.
The market place is organized as an automated-market-maker (AMM) market, which is in its functionality similar to Uniswap V2, from which also large parts of the code have been used.
At the heart of each market pair is a liquidity pool, which consists of USD stablecoins and ISSUAA asset tokens. For one underlying asset (E.g. DOW) there are always too separate market pools - one for the long token and one for the short token.
By definition, the value of both assets in the pool is identical. This means, that the price of an asset in USD stable coins is defined by the formula:
$price = \frac{\sum USD stable coins} { \sum assetTokens } = \frac{X}{Y}$

### Constant Product

ISSUAA market pools make prices based on a constant product invariant.
$XY=k$
This means that product of the number of tokens on each side of the pool remains constant across trading operations (buying / selling).

### Pricing

In order to preserve the constant product invariant, prices on the ISSUAA market adapt in a way that ensures that the product of resultant balances of the pool is as close as possible to the product calculated prior to the trade. With
$X$
being the current balance of the pool's source asset and and
$Y$
being that of the target asset:
$X Y = k =(X + A_{\text{in}})(Y - B_{\text{out}}) \\$
To determine the proper value of
$B_{\text{out}}$
$A_{in}$
:
$B_{\text{out}} = \frac{XA_{\text{in}}}{Y+A_{\text{in}}}$
The ISSUAA market is able to execute trades with only the current balances of the pool and the number of incoming tokens. The market price is encoded the number of pool's target tokens divided by the source asset (also called the pool ratio). The spread between the executed and the expected trade is:
$\text{spread} = \max\bigg(\frac{YA_{\text{in}}}{X+A_{\text{in}}} - \frac{YA_{\text{in}}}{X}, 0\bigg)$
When a pool has large volume from liquidity providers, the spread becomes smaller and helps the pool execute closer to its reported price of
$\frac{Y}{X}$
.

## LP Commission

In order to compensate liquidity providers, the ISSUAA market charges an LP Commission on each trade. The fee returns to the pool to serve as a reward for LP token holders and can only be withdrawn by burning LP tokens and reclaiming a portion of the pool.
On ISSUAA, each liquidity pool receives a fixed LP commission fee of 0.25%. This fee is levied on the trader and is received as asset token / ISS or USD stable coins, depending on the direction of the trade.

## Governance Token Commission

On top of the LP commission, a trading fee of 0.05% is charged, which will be used to buy back the ISS token on the internal ISSUAA market. Thus, linking the ISS token to the cash flows generated by the ISSUAA protocol.