Welsh Street Price Engine

Price Calculations in DEX

Welsh Street uses a constant-product automated market maker (AMM) to set exchange rates between WELSH and STREET. Rather than relying on a single price oracle, the protocol anchors to an external WELSH market price and then lets on-pool trading activity determine STREET’s price relative to it. CREDIT, in turn, is priced off the USD value of the WELSH and STREET actually held in reserves.

Welsh Price Anchor

WELSH’s USD reference price is pulled from ALEX Lab  on a recurring schedule (roughly every 10 minutes) and cached as the current external “anchor” price. This anchor represents WELSH’s broader market price across exchanges, independent of activity on the Welsh Street AMM itself.

AMM Prices

Every successful trade on the STREET/WELSH pool moves the pool’s reserves, and the protocol uses that reserve movement to adjust the cached WELSH anchor into an AMM-specific WELSH price:

AMM WELSH price = anchor price × (new WELSH reserve ÷ previous WELSH reserve)

In other words, the AMM starts from the external ALEX Lab anchor and then nudges it up or down based on how much WELSH just flowed into or out of the pool. Heavy one-sided trading pushes the AMM’s WELSH price away from the external market price; light or balanced trading keeps it close to the anchor. This is why the WELSH price used inside Welsh Street can, at times, differ from WELSH’s price on other exchanges — see Arbitrage below.

Welsh Price

The AMM WELSH price (above) is the USD price used for all downstream calculations on Welsh Street. It always starts from the ALEX Lab anchor and reflects a small, continuously updating adjustment for the pool’s own recent trading activity.

Street Price

STREET has no external market of its own — the AMM pool is its only price discovery mechanism. STREET’s USD price is derived by dividing the AMM WELSH price by the pool’s own STREET-to-WELSH reserve ratio:

STREET price = AMM WELSH price ÷ (STREET reserve ÷ WELSH reserve)

As trading shifts the reserve ratio, STREET’s price moves accordingly — pure constant-product price discovery, anchored to WELSH.

Credit Price

CREDIT is priced as a backing (net-asset-value) calculation rather than a traded market price. It reflects the USD value of the WELSH and STREET currently held in reserves, divided by CREDIT’s total supply:

CREDIT price = (WELSH held in reserves × WELSH price
              + STREET held in reserves × STREET price)
              ÷ total CREDIT supply

To reduce noise from individual trades, the STREET and CREDIT prices shown to users are smoothed over short (5-minute) rolling windows rather than reflecting every single swap instantaneously.

Arbitrage

Because WELSH trades across multiple decentralized exchanges throughout the Stacks ecosystem, its price can briefly diverge between venues — including between Welsh Street’s own AMM and the external ALEX Lab-tracked market price (see AMM Prices above). Traders who spot this gap can profit by buying WELSH where it’s cheaper and selling where it’s more expensive, which pushes prices back toward alignment. This arbitrage activity is a normal, healthy part of how decentralized markets operate — and each arbitrage trade also adds to trading volume and liquidity depth across the ecosystem.