【Author】 Mohan, Vijay
【Source】FINANCIAL INNOVATION
【影响因子】6.793
【Abstract】Recent advancements in decentralized finance (DeFi) have resulted in a rapid increase in the use of Automated Market Makers (AMMs) for creating decentralized exchanges (DEXs). In this paper, we organize these developments by treating an AMM as a neoclassical black-box characterized by the conversion of inputs (tokens) to outputs (prices). The conversion is governed by the technology of the AMM summarized by an 'exchange function'. Various types of AMMs are examined, including: Constant Product Market Makers; Constant Mean Market Makers; Constant Sum Market Makers; Hybrid Function Market Makers; and, Dynamic Automated Market Makers. The paper also looks at the impact of introducing concentrated liquidity in an AMM. Overall, the framework presented here provides an intuitive geometric representation of how an AMM operates, and a clear delineation of the similarities and differences across the various types of AMMs.
【Keywords】Decentralized finance (DeFi); Automated market maker (AMM); Decentralized exchange (DEX); Smart contract; Ethereum
【发表时间】2022 FEB 14
【收录时间】2022-03-01
【文献类型】期刊
【主题类别】
区块链应用-金融领域-
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