Networks of Automatic Market Makers (AMMs)

Slides are here: https://drive.google.com/file/d/1pyIV...
Daniel Engel delivered a talk on networks of AMMs at the Ethereum Engineering Group meet-up.

An automated market maker is an automaton that has custody of several pools of assets, and is capable of trading those assets with clients at rates set by a mathematical formula. Unlike traditional “order book” traders, AMMs trade directly with clients, and do not need to match up (and wait for) compatible buyers and sellers. Today, AMMs such as Uniswap, Bancor, and others have become one of the most popular ways to trade electronic assets.This work proposes a new, general framework for understanding AMMs and and how they can be composed to construct networks of AMMs. We make the following contributions: (1) a mathematical framework for designing a general class of AMMs, (2) an axiomatic characterization of desirable properties an AMM should satisfy, and (3) the first definition of what it means to compose AMMs in a sensible way, illustrating both the expressive power and limitations of networks of AMMs.