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There's no technical limitation stopping an AMM's pricing function from considering credit risk.
by dannyw 5y ago
There's no technical limitation stopping an AMM's pricing function from considering credit risk.
- RandomLensman 5y agoSure, it could have an algorithm that "solves" for everything, but we are nowhere near that. Also, no-one believes they can always correctly guess prices in financial markets, hence one-sided markets, liquidity gaps etc. Somehow price discovery is usually ignored in AMM circles, markets are not just about liquidity provision. Market making can lose a ton if money quickly, and right now those losses would flow heavily into predictable AMMs if they were around in traditional asset classes.