Post Idea: When does the tail wag the dog? Curvature and market making

One other paper that I have found particularly interesting is “When does the tail wag the dog? Curvature and market making

This post is relevant, timely, and novel. There is currently a lot of discussion about how automated market maker curves currently work and can work in the future. This post is on the cutting edge of innovation of how to think about these curves.

It builds on some of the more foundational work done by this research group in previous papers such as “An analysis of Uniswap markets”. The paper provides somewhat of a survey of different AMM curve models and looks at how they perform on 1) price stability and 2) LP returns. Further, it looks at how positions can be hedged and how yield farming affects these curves.

I am planning on doing a summary of this one.

3 Likes