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#Web3 Why does the liquidity pool's deflation mechanism allow the pool to go to zero?
The following image has been around for a few days, without any hint of excitement or hindsight; purely an example to analyze, avoiding pitfalls means being able to see the pits!🫰🌸🫰🌸🫰🌸
Other backend factors will not be discussed, without research there is no right to speak, let's just talk about the mechanism on the K-line:
Why has it been rising so well? The K-line is very enticing!
Reasons for the rise: The market is in a climbing phase, the coins bought are staked for interest, and there are no coins to sell in the market, so the K-line will naturally keep rising; with a small amount of sell orders, the deflation stabilizes the K-line.

Reasons for the liquidity pool thickening: The logic when buying coins is not purely transactional; rather, there is a logic of adding LP, which means taking a portion of the funds used to buy coins and using it to buy LP, automatically added by the contract.

Why did the liquidity pool go to zero?
This is the deflation mechanism of the liquidity pool, which aims to minimize price fluctuations when selling coins; the contract automatically withdraws LP value, dumping the withdrawn B coins into a black hole, and the funds withdrawn automatically buy again, resulting in a nice price, but the liquidity pool becomes thinner and thinner, ultimately leading to the shape shown in this image.
The reasons for the liquidity pool going to zero are just two: one is to dump coins; and the other is to withdraw LP, which is just one way of withdrawing LP.

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