Arbeitspapier
Automated Market Makers
A new type of Automated Market Makers (AMMs) powered by Blockchain technology keep liquidity on-chain and offer transparent price mechanisms. This innovation is a significant step in the direction of building a more transparent and efficient financial market. This paper explores analytically market mechanisms and shows the conditions when those mechanisms are equivalent. Furthermore, we show that AMM mechanisms inherently create loses for market makers from inefficient prices (dictated by the AMM solutions), however, these mechanisms work well for assets with low volatility. We further analytically explore the losses and quantify them. The paper ends by discussing the design of efficient decentralized exchange compared to traditional Central Limited Order Books (CLOBs) and highlights the former's potential regarding decentralized finance.
- Sprache
-
Englisch
- Erschienen in
-
Series: IFRO Working Paper ; No. 2020/08
- Klassifikation
-
Wirtschaft
General Equilibrium and Disequilibrium: Financial Markets
Asset Pricing; Trading Volume; Bond Interest Rates
- Thema
-
blockchain
decentralized exchanges
automated liquidity providers
auction
mechanism design
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Pourpouneh, Mohsen
Nielsen, Kurt
Ross, Omri
- Ereignis
-
Veröffentlichung
- (wer)
-
University of Copenhagen, Department of Food and Resource Economics (IFRO)
- (wo)
-
Copenhagen
- (wann)
-
2020
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Pourpouneh, Mohsen
- Nielsen, Kurt
- Ross, Omri
- University of Copenhagen, Department of Food and Resource Economics (IFRO)
Entstanden
- 2020
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