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SBF
@SBF_FTX
Replying to
@SBF_FTX
2) So, I *do* think AMMs make some sense for mean-reverty spreads. Like some premiums. Also, like USDC/TUSD/etc. (Curve!)
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SBF
@SBF_FTX
3) But you could do the same thing on a DEX. the tricky thing here is that the two cases
@cyounessi1
presents aren't quite the same. Say there are two things--A and B--and over time A/B --> 1 (i.e. they converge). In his case, treasuries and their futures.
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SBF
@SBF_FTX
4) In the CEX case, Cyrus has these markets: -- A / USD --B / USD In the AMM case, Cyrus as this pool: --A / B The reason he gets the "better" result in the AMM case is because it listed the right market.
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SBF
@SBF_FTX
5) But in the CEX case-- --they could have just listed a market of A / B, and then his firm could have put out lots of limit orders to provide--buying A/B @ 0.999, and selling A/B @ 1.001
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SBF
@SBF_FTX
6) And in the AMM case, if they instead had A/USD and B/USD pools, then when things moved the LPs would get picked off in both at the same time. They key here is having a single market that expresses the mean reversion rather than a two legged trade that is latency dependent.
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Ben Lilly
@MrBenLilly
Replying to
@SBF_FTX
and
@SBF_Alameda
@SBF_Alameda
Thoughts on the trendiness of AMMs resulting in a short term catalyst for a crypto credit crunch in the markets? TLDR - Permanent loss will result in outflows that reduce debts and credits in the market.
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Ben Lilly
@MrBenLilly
1) Post DeFi mania... Yields are dropping. Some are now turning negative as the market dries up. In a sideways or bearish market, liquidity dries up. Pools will get hurt as arb arises from minor pumps..
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