Key Point #4

Key Point #4:

You should rely on this balance of market dynamics in Key Point #2 and avoid manually rebalancing your FXPool

Note that the FXPool was designed so that even if the LP ratio is at 30:70 and not 50:50, it will still give out FX accurate rates. A common question is "Should I rebalance my FXPool back to 50:50?". The answer is no, because as a pool operator you should instead manage the LP ratios to incentivize organic market activity, rather than jumping in every time your FXPool becomes heavily weighted towards one asset.

Scenario:

If both the FXPool and external pool are heavily weighted towards one side, then this back and forth organic trading and subsequent arbitrage behavior (described in Key Point #2) will stop. Ideally, as a pool operator, you would want the FXPool and external pool to either both be at 50:50 or at "flipped" LP ratios.

Example Seeding Ratios:

FXPool	External Pool	Good for Organic Trading
50:50	50:50	✅
30:70	70:30	✅
70:30	70:30	❌
20:80	20:80	❌
45:55	55:45	✅

Note that the above table is not comprehensive, and is a simple list of scenarios. Your FXPool could be something like 47:53, while the external pool is 60:40, and that would work just fine. The idea is simply that the FXPool and external pool should be "roughly opposite" in terms of LP ratios to incentivise organic trading and rebalancing