AMM-based DEX on the XRP Ledger
Fuente:
arXiv
Enregistré dans:
| Auteurs principaux: | , , , , , |
|---|---|
| Format: | Preprint |
| Publié: |
2023
|
| Sujets: | |
| Accès en ligne: | |
| Tags: |
Ajouter un tag
Pas de tags, Soyez le premier à ajouter un tag!
|
| _version_ | 1866915464503885824 |
|---|---|
| author | Cruz, Walter Hernandez Dahi, Firas Feng, Yebo Xu, Jiahua Malhotra, Aanchal Tasca, Paolo |
| author_facet | Cruz, Walter Hernandez Dahi, Firas Feng, Yebo Xu, Jiahua Malhotra, Aanchal Tasca, Paolo |
| contents | Automated Market Maker (AMM)-based Decentralized Exchanges (DEXs) are crucial in Decentralized Finance (DeFi), but Ethereum implementations suffer from high transaction costs and price synchronization challenges. To address these limitations, we compare the XRP Ledger (XRPL)-AMM-Decentralized Exchange (DEX), a protocol-level implementation, against a Generic AMM-based DEX (G-AMM-DEX) on Ethereum, akin to Uniswap's V2 AMM implementation, through agent-based simulations using real market data and multiple volatility scenarios generated via Geometric Brownian Motion (GBM). Results demonstrate that the XRPL-AMM-DEX achieves superior price synchronization, reduced slippage, and improved returns due to XRPL's lower fees and shorter block times, with benefits amplifying during market volatility. The integrated Continuous Auction Mechanism (CAM) further mitigates impermanent loss by redistributing arbitrage value to Liquidity Providers (LPs). To the best of our knowledge, this study represents the first comparative analysis between protocol-level and smart contract AMM-based DEX implementations and the first agent-based simulation validating theoretical auction mechanisms for AMM-based DEXs. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2312_13749 |
| institution | arXiv |
| publishDate | 2023 |
| record_format | arxiv |
| spellingShingle | AMM-based DEX on the XRP Ledger Cruz, Walter Hernandez Dahi, Firas Feng, Yebo Xu, Jiahua Malhotra, Aanchal Tasca, Paolo Computational Engineering, Finance, and Science Automated Market Maker (AMM)-based Decentralized Exchanges (DEXs) are crucial in Decentralized Finance (DeFi), but Ethereum implementations suffer from high transaction costs and price synchronization challenges. To address these limitations, we compare the XRP Ledger (XRPL)-AMM-Decentralized Exchange (DEX), a protocol-level implementation, against a Generic AMM-based DEX (G-AMM-DEX) on Ethereum, akin to Uniswap's V2 AMM implementation, through agent-based simulations using real market data and multiple volatility scenarios generated via Geometric Brownian Motion (GBM). Results demonstrate that the XRPL-AMM-DEX achieves superior price synchronization, reduced slippage, and improved returns due to XRPL's lower fees and shorter block times, with benefits amplifying during market volatility. The integrated Continuous Auction Mechanism (CAM) further mitigates impermanent loss by redistributing arbitrage value to Liquidity Providers (LPs). To the best of our knowledge, this study represents the first comparative analysis between protocol-level and smart contract AMM-based DEX implementations and the first agent-based simulation validating theoretical auction mechanisms for AMM-based DEXs. |
| title | AMM-based DEX on the XRP Ledger |
| topic | Computational Engineering, Finance, and Science |
| url | https://arxiv.org/abs/2312.13749 |