Uniswap was the first decentralized exchange to popularize the use of a constant function. The easy-to-grasp constant product function set the stage for several innovations in the space.
Balancer took it a step further.
The protocol took Uniswap’s function and generalized it allowing for the creation of multi-token liquidity pools.
Curves’ innovation revolved around creating a hybrid function by combining the best qualities of two constant functions. This iteration paved the way for finding efficient ways to exchange stable assets.
Check out the full piece for an overview and intuition of the math behind the constant functions powering:
1/ The DeFi Pulse Index (DPI) now has over $35M in assets showing increased demand for crypto indexes
While DPI is a good investment for beginners, it may not provide the diversification that sophisticated investors demand, leaving them overexposed to individual DeFi assets
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2/ Index funds are by far the most traded instruments in traditional finance. They provide diversification, broad market exposure, have lower fees, and seek to match the return of the market (or asset class) creating the perfect investment vehicle for new investors
3/ Despite these attributes, index funds can become highly concentrated depending on their construction methodology reducing the diversification benefits of the product. This applies in particular to capitalization-weighted indexes like the S&P 500 and the DeFi Pulse Index