Automated Market Makers in Cryptoeconomic Systems: A Taxonomy and Archetypes

ArXiv ID: 2309.12818 “View on arXiv”

Authors: Unknown

Abstract

Designing automated market makers (AMMs) is crucial for decentralized token exchanges in cryptoeconomic systems. At the intersection of software engineering and economics, AMM design is complex and, if done incorrectly, can lead to financial risks and inefficiencies. We developed an AMM taxonomy for systematically comparing AMM designs and propose three AMM archetypes that meet key requirements for token issuance and exchange. This work bridges software engineering and economic perspectives, providing insights to help developers design AMMs tailored to diverse use cases and foster sustainable cryptoeconomic systems.

Keywords: Automated Market Makers (AMM), Decentralized Exchanges (DEX), Cryptoeconomics, Token Issuance, Cryptocurrency

Complexity vs Empirical Score

• Math Complexity: 7.0/10
• Empirical Rigor: 3.0/10
• Quadrant: Lab Rats
• Why: The paper presents a taxonomy of AMM designs with mathematical underpinnings in pricing functions and economic mechanisms, but lacks backtesting, empirical datasets, or statistical validation, focusing instead on conceptual frameworks and software design.

  flowchart TD
    A["Research Goal: Design Robust AMMs for Decentralized Exchanges"] --> B["Methodology: Taxonomy Development & Archetype Creation"]
    B --> C["Data Inputs: Literature Review & Economic Principles"]
    C --> D["Computational Process: Cross-Domain Analysis"]
    D --> E{"Outcome: AMM Taxonomy"}
    D --> F{"Outcome: 3 AMM Archetypes"}
    E --> G["Key Finding: Bridges Software Engineering & Economics"]
    F --> G
    G --> H["Impact: Sustainable Cryptoeconomic Systems"]