research-article

Concentrated Liquidity in Automated Market Makers

Author:

Robin FritschAuthors Info & Claims

DeFi '21: Proceedings of the 2021 ACM CCS Workshop on Decentralized Finance and Security

Pages 15 - 20

https://doi.org/10.1145/3464967.3488590

Published: 15 November 2021 Publication History

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Abstract

We examine how the introduction of concentrated liquidity has changed the liquidity provision market in automated market makers such as Uniswap. To this end, we compare average liquidity provider returns from trading fees before and after its introduction. Furthermore, we quantify the performance of a number of fundamental concentrated liquidity strategies using historical trade data. We estimate their possible returns and evaluate which perform best for certain trading pairs and market conditions.

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Cited By

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Fritsch RCanidio AChua TNgo CKumar RLauw HKa-Wei Lee R(2024)Measuring Arbitrage Losses and Profitability of AMM LiquidityCompanion Proceedings of the ACM Web Conference 202410.1145/3589335.3651961(1761-1767)Online publication date: 13-May-2024
https://dl.acm.org/doi/10.1145/3589335.3651961
Hägele S(2024)Centralized exchanges vs. decentralized exchanges in cryptocurrency markets: A systematic literature reviewElectronic Markets10.1007/s12525-024-00714-234:1Online publication date: 18-May-2024
https://doi.org/10.1007/s12525-024-00714-2
Alexander CChen XDeng JFu Q(2023)Market Efficiency Improvements from Technical Developments of Decentralized Crypto ExchangesSSRN Electronic Journal10.2139/ssrn.4495589Online publication date: 2023
https://doi.org/10.2139/ssrn.4495589
Show More Cited By

Index Terms

Concentrated Liquidity in Automated Market Makers
1. Applied computing
  1. Law, social and behavioral sciences
    1. Economics

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Information

Published In

DeFi '21: Proceedings of the 2021 ACM CCS Workshop on Decentralized Finance and Security

November 2021

33 pages

ISBN:9781450385404

DOI:10.1145/3464967

Program Chairs:
Dawn Song
University of California, Berkeley
,
Roger Wattenhofer
ETH Zurich
,
Arthur Gervais
Imperial College London
,
Philipp Jovanovic
University College London

Permission to make digital or hard copies of all or part of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. Copyrights for components of this work owned by others than the author(s) must be honored. Abstracting with credit is permitted. To copy otherwise, or republish, to post on servers or to redistribute to lists, requires prior specific permission and/or a fee. Request permissions from [email protected].

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Association for Computing Machinery

New York, NY, United States

Publication History

Published: 15 November 2021

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CCS '21

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CCS '21: 2021 ACM SIGSAC Conference on Computer and Communications Security

November 19, 2021

Virtual Event, Republic of Korea

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Cited By

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Fritsch RCanidio AChua TNgo CKumar RLauw HKa-Wei Lee R(2024)Measuring Arbitrage Losses and Profitability of AMM LiquidityCompanion Proceedings of the ACM Web Conference 202410.1145/3589335.3651961(1761-1767)Online publication date: 13-May-2024
https://dl.acm.org/doi/10.1145/3589335.3651961
Hägele S(2024)Centralized exchanges vs. decentralized exchanges in cryptocurrency markets: A systematic literature reviewElectronic Markets10.1007/s12525-024-00714-234:1Online publication date: 18-May-2024
https://doi.org/10.1007/s12525-024-00714-2
Alexander CChen XDeng JFu Q(2023)Market Efficiency Improvements from Technical Developments of Decentralized Crypto ExchangesSSRN Electronic Journal10.2139/ssrn.4495589Online publication date: 2023
https://doi.org/10.2139/ssrn.4495589
Westerkamp MKüpper A(2023)Instant Function Calls Using Synchronized Cross-Blockchain Smart ContractsIEEE Transactions on Network and Service Management10.1109/TNSM.2023.323643720:3(2136-2150)Online publication date: 12-Jan-2023
https://dl.acm.org/doi/10.1109/TNSM.2023.3236437

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A Note on Optimal Fees for Constant Function Market Makers

Funding Liquidity and Market Liquidity: The Broker-Dealer Perspective

Quantifying Loss in Automated Market Makers