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You are missing the point. Those providing liquidity are not making money because of their sophisticated trading strategies. They make money by being the exchan
by rglullis 4y ago
You are missing the point. Those providing liquidity are not making money because of their sophisticated trading strategies. They make money by being the exchange.
- amluto 4y agoWhat is “the exchange”? They are making money be being an exchange and the major market maker on it. But the fees are insane by traditional finance standards, and the barrier to entry of creating a new exchange is pretty low.
- rglullis 4y agoThe barrier to create a new exchange is almost zero. The code from Uniswap is open source, you can clone and be running a competitor in a day. The challenge would be in providing liquidity at levels that could compete with Uniswap's. You can go buy your userbase like Sushiswap did, but you'll see that LPs already learned their lesson that what matters is the transaction volume and these governance tokens being given as an incentive are worthless, so you need to buy both makers and traders. If you are willing to keep a lot of capital around for a long time and taking the risk of impermanent loss, eventually you will be able to take users from Uniswap. But who would do that?