3 ms·
If the AMM algorithms are the most profitable way to run a market making trading strategy, why wouldn't electronic market makers in "tradfi" not be using someth
by maxbond 5y ago
If the AMM algorithms are the most profitable way to run a market making trading strategy, why wouldn't electronic market makers in "tradfi" not be using something very similar?
If it is not the most profitable, why wouldn't we expect it to lose money over time to competing algorithms?
The only way I could see this working is if the exchange deliberately gave the AMM some kind of advantage, like allowing it to trade much faster than all other participants, or without paying fees. Say, if it were allowed to connect to an exchange like IEX in front of the fiber optic speedbump.
- dannyw 5y agoIt's not the most profitable, the same way a random forest is unlikely to be more effective than a properly trained deep learning model. However, it's efficient when it comes to computational power (and cost!) required. On Ethereum, storing a megabyte of data costs hundreds of thousands of dollars.