A THEORY OF AUTOMATED MARKET MAKERS IN DEFI

【Author】 Bartoletti, M. A. S. S. I. M. O.; Chiang, James hsin-yu; Lluch-lafuente, A. L. B. E. R. T. O.

【Source】LOGICAL METHODS IN COMPUTER SCIENCE

【影响因子】0.591

【Abstract】Automated market makers (AMMs) are one of the most prominent decentral-ized finance (DeFi) applications. AMMs allow users to trade different types of crypto-tokens, without the need to find a counter-party. There are several implementations and models for AMMs, featuring a variety of sophisticated economic mechanisms. We present a theory of AMMs. The core of our theory is an abstract operational model of the interactions between users and AMMs, which can be concretised by instantiating the economic mecha-nisms. We exploit our theory to formally prove a set of fundamental properties of AMMs, characterizing both structural and economic aspects. We do this by abstracting from the actual economic mechanisms used in implementations, and identifying sufficient conditions which ensure the relevant properties. Notably, we devise a general solution to the arbitrage problem, the main game-theoretic foundation behind the economic mechanisms of AMMs.

【Keywords】

【发表时间】2022

【收录时间】2023-01-20

【文献类型】理论模型

【主题类别】

区块链应用-虚拟经济-DeFi