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📈 Automated Market Makers vs. Central Limit Order Books: Which is Better? 🤔 It depends on the asset class and the specific trading requirements. Key Insights from the Paper 📄 CFMMs (e.g., Uniswap): ▶ Simplicity: Favor simplicity over expressiveness. The aggregate demand curve can be described using a single liquidity parameter. ▶ Limitations: Most demand curves cannot be well approximated by the corresponding single-dimensional family of functions. ▶ Case Study: Uniswap v3 achieves a near-optimal compromise between complexity and approximation. LOBs: ▶ Expressiveness: Any downward-sloping demand curve can be well approximated by a collection of limit orders. ▶ Complexity: Requires significant space to describe the state of a LOB. Conclusion: CFMMs prioritize simplicity, while LOBs emphasize expressiveness. The optimal choice depends on the specific needs and constraints of the asset class and trading environment. 💬 Feel free to reach out for a detailed discussion or any questions you might have!

AMMs on DEXs provide CEX-comparable market quality! We've conducted an in-depth analysis of major automated market makers (AMMs) on decentralized exchanges (DEXs) to measure their influence on market quality. Here are our key findings: 1.    Uniswap v2 provides consistent liquidity to markets regardless of market conditions and price fluctuations 2.    Uniswap v3 can reach CEX-comparable market quality, directly competing with conventional market makers 3.    Like conventional market makers, Uniswap v3 is susceptible to significant liquidity fluctuations when prices become volatile. For more insights, check out our research article published in Electronic Markets - The International Journal on Networked Business. 👉https://lnkd.in/gjteXs2F Kudos to Alexander Poddey | Niclas Kannengießer | Ali Sunyaev

Uniswap V3 is an excellent example when good maths lead to a very effective implementation. How it's made? The answers are in our new article in MixBytes blog "Uniswap v3 ticks - dive into concentrated liquidity": https://lnkd.in/e3czC58Q #defi #smartcontracts

In the world of decentralized finance (DeFi), liquidity is crucial. In our latest blog, we introduce a new formula for calculating liquidity scores and apply it to two popular DeFi protocols: PancakeSwap and Curve. Discover how the formula uses TVL, the number of unique wallets, transaction volume, and the number of transactions to provide insights into the platform's health. Learn why Curve is currently four times more liquid than PancakeSwap. Visit the Alterscope platform for detailed analyses and tools!📊 https://lnkd.in/d949ukmD

Check it out and let me know your thoughts!

This study investigates liquidity provision on Uniswap, finding that fixed gas fees drive liquidity providers (LPs) to choose between high and low fee pools, leading to liquidity fragmentation that enhances market quality by attracting more LPs and fostering competition, especially in low-fee pools. The studies findings are as follows: High-fee pools attract more total liquidity supply but execute a smaller portion of trading volume compared to low-fee pools. This is because large LPs dominate low-fee pools and adjust their positions in response to significant trading volume, while small LPs prefer high-fee pools for their lower liquidity management costs despite lower execution probabilities. Fragmented liquidity, where liquidity is distributed across pools with different fee structures, enhances market quality by encouraging more LPs to enter the market and by improving competition among LPs in low-fee pools. The behaviour of LPs is influenced by fixed transaction costs (gas fees). Higher gas fees lead LPs to prefer high-fee pools to minimize their active management costs, thereby affecting the distribution of liquidity across pools with different fee levels. Market dynamics lead to a fragmented equilibrium, where liquidity does not naturally consolidate in a single pool but is instead distributed across multiple pools, each attracting LPs with different strategies and cost considerations. Great paper and worth a read if your are in research and development of DeFi Quantitative Trading Strategies. #Devinegroup #Hedgefunds #Quant #Quantitativefinance

New Amberdata Launch 🌐 Unlock DeFi potential with portfolio insights! Amberdata users are now able to further capitalize on DeFi with event-level Uniswap v3 and lending protocol analytics. With our first-of-its-kind analytics across pools and protocols, power complex portfolio management, and accurate accounting. Track Uniswap Labs v3 fees, impermanent loss, and lending protocol profits across positions. Gain granular insights into token prices, liquidity amounts, interest earned, and more. Stay compliant and seize DeFi opportunities with trusted data! Learn more in the first comment 🔗

Our December 2023 factsheet for Uniswap is out. We cover: • Volume: Where is the volume coming from? • Users: Who are Uniswap's core users? • Valuation: Is $UNI over or undervalued? • Correlation: Which asset is $UNI correlated to? 🧵 🏪 Volume Uniswap generated: • $43.8 billion in volume | 20% up :chart_with_upwards_trend: • With 14 million swaps | 9% up :chart_with_upwards_trend: • Making $76 million in fees | 34% up :chart_with_upwards_trend: 👥Users Uniswap has. • 13.1 million cumulative traders • Last month only 1.45 million of these were active • 42% of these traders (620k) were activated in Dec • These new traders generated 8% of monthly volume ($1.4 billion) 🤝Correlation $UNI is: • More correlated to ETH (0.60) than BTC (0.50) • Less correlated in the short-term (to ETH and BTC) 💸 Valuation • Uniswap's P/F ratio is 5.2x. For every $1 in fees, Uniswap adds $5.2 to its market cap. • Uniswap's Working Capital turnover is 12.1. For every $1 to LPs, Uniswap makes $12.1 in volume. 🤼♂️ Peer comparison. Uniswap is the largest DEX in the market. But more than that, the protocol: • More Capital Effecient • Has a cheaper relative valuation • Has a more valuable customer base If you’d like the full factsheet, comment below and we’ll DM it to you. Let us know which protocols and assets you’d like us to breakdown. For more information, check out → pyor.xyz

What’s in your wallet? You deserve to know more than just the wallet balance. Get event-level insights into Uniswap v3 and lending protocol profits across multi-chains. Deep analytics that help you develop strategy to mitigate impermanent loss.

Classification of Digital Assets: A Guide Under the FIT21 Act,by Rishab Ramakrishna and Krishna Hegde What is FIT21? The FIT21 Act is a regulatory framework designed to provide clear guidelines for classifying digital assets within U.S. markets. What We Did? At PYOR, we authored a comprehensive report that categorizes 29 digital assets into digital securities, digital commodities, and stablecoins. This classification is based on 5 key criteria and 10 specific steps. We evaluated each token or digital currency using the following 5 criteria: •   Decentralization (yes/no) •   Programmatic functioning (yes/no) •   Broad distribution (yes/no) •   Issuer control (yes/no) •   Initial coin offering (yes/no) Based on these criteria, we classified the 29 digital currencies into digital securities, digital commodities, and stablecoins. This report provides detailed information on: •   The classification criteria and steps taken to categorize digital assets •   Frequently asked questions about digital asset classification •   The analysis and classification of individual tokens Report here: https://lnkd.in/gFAyrPdm This guide aims to help investors understand the clear classification of digital assets and make informed decisions.