My billion dollar idea is to bring AMM technology to create a new stock exchange that works on a blockchain. It would totally take over Wall Street. Which is why it probably won't happen any time soon.
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It's bound to happen eventually.
AMM is severely underestimated.
How would you incentivize liquidity providers?
Using a central governing token?
Or will securities be able to allocate inflation to farms as well?
Dunno. My initial thought is that arbitrage volume between stock exchanges will be enough.
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Arbitrage only benefits the takers/traders.
Gotta have a trading fee to make it worth it for liquidity providers.
Luckily the volatility of the stock market is much lower than crypto,
so the fee would likely be competitive with the legacy system.
Not sure if LPs are going to enjoy having half their assets paired to USD though.
Perhaps two pairs (one to USD, another to BTC) would be in order.
Yes, the AMM system in my mind would have trading fees just like most (all?) crypto AMMs have built in.
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Right right it's just that... The trading fees on Uniswap and Pancakeswap aren't really high enough to incentivize the LPs. Yield farming added so much sugar on the top it seems like a no-brainer requirement at this point.
If there is no farming incentive for providing liquidity then everyone providing liquidity will automatically lose money from "impermanent loss" every time prices move. There would be nothing to gain from providing liquidity, so no one would do it.
AMM is superior to order books because the farming mechanic incentivizes everyone to all throw their liquidity into the same pool, increasing liquidity exponentially compared to an order book and greatly reducing slippage in both directions.
Without yield farming, AMM is pointless.
But at the same time trading fees are part of the yield.
So you could jack up trading fees to like 1%-2% and pay the LPs with that.
You can't just reject reality.
2 + 2 = 4
It's already happening.
It's already happened.
AMM mathematically provides more liquidity to the market on a dollar for dollar ratio.
People are using them.
These are facts.
Literally no one is saying otherwise.
Risk: meet reward.
Providing liquidity is far less risky than trading.
I think a chain like this must be ultra-secure. Think about someone rip off a big stake of a stock that affects a lot of people.
Definitely
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