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Uniswap is algorithmic liquidity. It doesn't "follow" anybody. It is true that the exchanges have more volume, but that is not necessarily 'real' volume. The o

by jl2718 5y ago

Uniswap is algorithmic liquidity. It doesn't "follow" anybody. It is true that the exchanges have more volume, but that is not necessarily 'real' volume. The operating model of a centralized exchange is that they get paid to both provide and consume liquidity, so much of the volume is their own. On Uniswap, there is no privileged entity, so everybody pays to consume liquidity. This is a huge damper on volumes. Note that there are MEV forks that also massively increase the Uniswap volume too, but they have to pay at least the trade fee on both sides of a sandwich.

jqpabc123 5y ago
It doesn't "follow" anybody. The uniswap "algorithm" has no other choice but to follow the "market". Otherwise, it would do no trades. Binance's trading volume is 40-50 times that of uniswap. What Binance does affects the price on uniswap --- way more than the other way around. If Binance mints USDT and uses it to buy lots of BTC, what happens to the price of BTC on uniswap? Once the price on uniswap and other exchanges starts going up, others see it and jump in to avoid getting left behind --- driving it even higher. What happens when Binance then sells BTC? This is a classic "pump and dump". It happens all the time because there is nothing to stop it. Binance is the one controlling "the market". Uniswap with their "algorithm " just plays along.
- jl2718 5y ago
  Unless I misunderstand you, I think you need to look into the “automatic market maker” concept. Their paper is the best source to cut through the chatter: https://uniswap.org/whitepaper.pdf https://uniswap.org/whitepaper.pdf
  - jqpabc123 5y ago
    I haven't looked at their paper but I think I understand the concept. Algorithm or not, they are just a little fish that can't possibly do very much to alter the direction of a marketplace whale they don't control. The only way for this concept to have any real overall significance is if they establish their own separate crypto and be the only "market maker" for it. But then this is "centralization" all over again.

by jl2718 5y ago

jqpabc123 5y ago

It doesn't "follow" anybody. The uniswap "algorithm" has no other choice but to follow the "market". Otherwise, it would do no trades. Binance's trading volume is 40-50 times that of uniswap. What Binance does affects the price on uniswap --- way more than the other way around. If Binance mints USDT and uses it to buy lots of BTC, what happens to the price of BTC on uniswap? Once the price on uniswap and other exchanges starts going up, others see it and jump in to avoid getting left behind --- driving it even higher. What happens when Binance then sells BTC? This is a classic "pump and dump". It happens all the time because there is nothing to stop it. Binance is the one controlling "the market". Uniswap with their "algorithm " just plays along.

jl2718 5y ago
Unless I misunderstand you, I think you need to look into the “automatic market maker” concept. Their paper is the best source to cut through the chatter: https://uniswap.org/whitepaper.pdf https://uniswap.org/whitepaper.pdf
- jqpabc123 5y ago
  I haven't looked at their paper but I think I understand the concept. Algorithm or not, they are just a little fish that can't possibly do very much to alter the direction of a marketplace whale they don't control. The only way for this concept to have any real overall significance is if they establish their own separate crypto and be the only "market maker" for it. But then this is "centralization" all over again.