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Thales
@thales
Market Making in units of token prices has always plagued various Prediction Market products built on Ethereum. Constant Function Market Making incur significant losses in this scenario, due to the fact that the losing side of the market has to go to zero on maturity. A different Market Making approach had to be invented. Thales Protocol solved this problem by building it's Automated Market Making architecture as such that it provides on-demand liquidity around a fixed oracle-based probability reference point. This also allows the Thales AMMs to offer on-demand liquidity to multiple markets from a single specialized AMM contract that uses a single counterparty collateral pool. Controlling risk management with a risk cap and skew impact allows the AMM to market make in units of risk rather than token prices. This means that the AMM has theoretically unlimited capital efficiency, so long as the risk exposure of a pool remains within the risk cap.
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atd
@atd
Quite insightful! Thanks for sharing.
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