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Haardik
@haardikkk
AMMs: - better UI/UX - largest trading volume - available everywhere - actually decentralized - nicely composable - crypto native - not wintermute why do you think CLOBs are still better?
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Thomas Humphreys
@so
AMMs are second class citizens. We are already moving towards RFQs which are just market-makers quoting from clobs
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Haardik
@haardikkk
Question is more so in what ways is that better?
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Thomas Humphreys
@so
amms < clobs: - decentralized on smart contract level; client/rpc is still centralized - arbitrage paradise for mms (wintermute) - big UI/UX learning curve (bad slippage = sandwich, arb, front/back run) - less liquid than clobs - fees suck clobs are the backbone of defi. that said, I'm bullish on rfqs.
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Haardik
@haardikkk
Arbitrage paradise (LVR) has several solutions being implemented right now MEV attacks mostly prevalent on L1 only Decentralized liquidity instead of outsourcing everything to wintermute Fees fairly configurable, top pools have very low fees usually Ideologically how are offchain matchers with large MMs any different from just using robinhood for your trades?
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Thomas Humphreys
@so
"several solutions being impl right now" – that's fair, but the problem is still prevalent and a current arg towards inferiority you'll be surprised by how much of that amm liquidity are by market makers hedging on clobs or options or yield farming rewards (otc). amm fees will never be better than clobs: 5 eth -> arb is 25 bps fee + 68 bps price impact vs binance 10 bps fee. re: off-chain matchers. MMs have an edge on pricing that no one else has. they can negotiate fees on exchanges (significantly more) and have tech to spread your trade across their matching engine.
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Thomas Humphreys
@so
We haven't even touched on risk, which is a very overlooked field in crypto defi. most third party risk assessors and insurers will quote lower premiums on most clobs vs amms (lower premiums = lower perceived risk)
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Haardik
@haardikkk
I appreciate this response I think there’s new AMM developments happening right now that solves the liquidity problems you’re talking about, and I’m confident the fee issue will also be solved as a side effect But they’re not here yet which is fair. On that note though CLOBs are also relatively new and only account for a small % of volume today - so we should be seeing more data on both a few months down the line
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