The Tie Research
Decentralized Exchanges: Current Limitations of AMM Models & Exploring the Future of DEX Mechanics
By Chí Phan
February 20, 2024
- When the price moves to $1,800, your bins are quickly emptied (your ETH is now cheaper compared to the market price), and all your ETH is converted to USDC. You are now holding 3,400 USDC instead of $3,500 (1 ETH @$1,800 and 1,700 USDC).
- When the price moves to $1,600, all the USDC in your chosen pool is quickly emptied (because people can buy cheaper ETH and swap it in your pools), leaving you holding 2 ETH and 0 USDC, which is worth $3,200 instead of $3,300.
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