Automated Market Makers are decentralized exchange protocols that use algorithms to facilitate token swaps without traditional order books. They operate by pooling assets into liquidity pools, where users can trade against these reserves. The price of an asset is determined by a mathematical formula that adjusts based on the ratio of tokens in the pool. This system enables continuous liquidity and permissionless trading of digital assets.
Context
The current discourse surrounding Automated Market Makers centers on their role in DeFi innovation, particularly in managing liquidity for new or low-volume tokens. Discussions also address the economic implications of impermanent loss for liquidity providers and the potential for regulatory scrutiny concerning their decentralized nature. Future developments may involve advancements in automated strategies for liquidity management and improved efficiency in cross-chain AMM functionalities.
This research introduces a time-advantage auction mechanism, fundamentally altering how Maximal Extractable Value is distributed and potentially enabling fairer transaction ordering.
A novel AMM mechanism processes transactions in batches, preventing miners from extracting value through predatory ordering and ensuring fair user interaction.
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