The success of an Automated Market Maker (AMM) systems increasingly depends on the strategic positioning of liquidity pools and the efficiency of trading paths. Understanding where a liquidity pool fits in a broader trading ecosystem, and how trades flow through direct and indirect routes, is essential for optimizing returns and minimizing volatility. This post explores […]
Category: Market Making
Understanding Price Impact and Slippage in Liquidity Pool Dynamics
Automated Market Makers (AMMs) have become central to the functioning of liquidity across networks like Stellar. One of the most important aspects of AMM-based trading is understanding how price impact and slippage affect trades and liquidity pool performance. This post explores how these dynamics work, why they matter, and how they influence returns for liquidity […]
Potential Methodologies for Calculating Optimal Pool Ratios
In decentralized liquidity systems, the ratio of assets allocated across pools can significantly influence earning efficiency, market stability, and price sensitivity. This post explores a data-driven approach to optimizing pool ratios using core performance metrics, dynamic adjustments, and system-aware constraints. The goal is to propose a speculative but structured framework for calibrating pool weights in […]
Key Insights into Liquidity Pool Dynamics
Liquidity pools are the backbone of decentralized trading platforms, but their success depends on more than just how much capital they hold. A deeper look at pool behavior reveals that the relationship between pool size, volume, and efficiency is complex, and getting it right requires a careful balance of several interrelated factors. I have identified […]
Price Volatility in AMM Liquidity Pools
Automated Market Makers (AMMs) play a central role in decentralized finance, but they also introduce unique behaviors in price volatility, especially when liquidity is unevenly distributed across trading pairs. By exploring both individual pool dynamics and system-wide liquidity effects, we can gain a clearer picture of how volatility emerges and propagates through AMM-based markets. Individual […]
Leverage Supply Trades on the Stellar DEX
If you’ve been trading on Stellar’s decentralized exchange for a while, you’ve probably noticed that tokens with similar market caps can perform dramatically differently over time. What might look like random market behavior often reveals deeper patterns related to supply mechanics and liquidity distribution. Understanding these patterns can unlock what I call a “Leverage Supply […]
The Grind: Small Account Market Making
One Trade is Legion The Grind is not about a single trade. It is about stacking both buy and sell orders in a series of trades in order to profit off the spread while helping the market maintain liquidity. This is quite a different view of markets than taken by the average trader. It is […]