Result 1:
"If the volatility of an asset is high enough relative to its average rate of return, LPs on Uniswap will do better than HODLers over time, even when the only incoming trades are arbs."
TLDR: LPing can be good without "retail" volume and arb is not bad for LPs
3/
Result 2:
In a zero latency, zero network fee, arbitrage-only (no "retail") world, the profit-optimizing LP fee approaches (but never touches) 0.
This was one of the more shocking results
TLDR: Lower fees = more profitable arb trades = more total fee revenue
4/
Promising for very low AMM fees in low latency world
Of course in real world w/ retail volume, demand doesn't increase proportional to fees decreasing fast enough to make near-zero fees the optimal strategy (h/t @_charlienoyes).
Retail demand curve needs more research
5/
Result 3: (h/t @danrobinson)
Explaining this one clearly is kind of an alpha leak but arbitrage fees increase super-linearly with liquidity
TLDR: More liquidity = more profitable arbitrage trades = super-linear arb fees = volatility harvesting fees > retail fees
6/
Closing thoughts:
We don't live in a world with infinite arb liquidity, zero latency, no network fees, and no retail trading so for implementation purposes plz use brain.
However, this research is important for improving our understanding of optimal AMM / CFMMs.
7/
Overall, these results are incredibly exciting. Looking forward to continued AMM research from @_charlienoyes / @danrobinson / @paradigm and friends!
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Second, you can’t directly compare manipulation resistance of entirely on-chain oracles that pulls from dex with something like chainlink that reports off-chain data
The attack surfaces and trust assumptions are very different
3/
Uniswap TWAPs report 100% accurate average of Uniswap price (at start of block) across arbitrary time periods with perfect reliability and accuracy.
The cost of manipulating is whatever is lost to arbitrage by moving the average market price across this period
Can't tell who is pretending and who legitimately doesn't understand that the $1B TVL deposited in an incredibly high risk investment on a single days notice is mostly massive whales
Anyone talking about community vs VC here is either delusional or intentionally misleading.
2/
This is not YFI. Andre built something new and real, that has value.
Sushi is one days effort by any competent dev at most.
It's just whales playing whale games trying to cash in on a hype cycle and the value created by Uniswap.
Not surprised to see @iamDCinvestor talking about this, he's one of seemingly few people on crypto twitter who seems to understand the games whales play when the stakes are raised (and tries to explain them).