15 Jan 2022
TheAMMBook.org Weekly Newsletter
the first AMM Book newsletter

What happened with us this week?

1. The AMM Book — production setup (Stefan Loesch)

   I have written about my production set-up for the book. For those interested: it starts with markdown / mathjax + some yaml, that is processed using Python / Jupyter and then via pandoc to either end up in Word or LaTeX.

What happened this week? Well, as far as The AMM Book is concerned, theammbook.org happened. We now have a website, and it is gorgeous! Our paper is almost ready to go out as first draft for review (technically it is already here of course but you can’t download it from there). The formula section is making good progress, even though a few of the more not-so-standard ones are still missing details.

Also we had a good first stab at the list of projects and we are currently collecting a lot of the links. Also we now have a decent selection of references – as far as academic papers are concerned we are probably reasonably complete. We are still missing whitepapers and blogs, and we also need to take a decision of how to structure the list so it does not become to unwieldy.

What else happened this week?

1. Citadel Securities takes in $1.15B investment from Sequoia and Paradigm (CoinTelegraph)

   That’s an interesting sign that the convergence of tradfi and defi is starting to happen.

2. Hong Kong Monetary Authority Issues Discussion Paper on Crypto Assets and Stablecoins (CoinDesk)

   Another sign that crypto assets are going mainstream.

3. What is AMM and what is its role in DeFi? (CNBC)

   Even mainstream news are now covering AMMs.

4. NFT marketplace OpenSea in talks to buy Dharma Labs (Axios)

   OpenSea is the predominant exchange for NFTs, and it is smart contract based (it is an order book model, which is easier to implement for NFTs than for fungible tokens). Note the valuation at which OpenSea raises funding ($13bn)

Overall a very interesting week for decentralized finance markets, especially the M&A and investment activity that is now operating in magnitudes of billions of dollars.

Interesting research

1. Vitalik Buterin gives thumbs down to cross-chain applications (CoinTelegraph)

   That was an interesting comment from Vitalik where he suggested that too many funds in bridges make the chain eco system unstable, and that financial application may end up concentrated at a single chain.

2. How to deploy delta-neutral liquidity in Uniswap (Guillaume Lambert)

   This article shows nicely how it is possible to engineer a delta-neutral position on an AMM (the mention of Uniswap is a bit of a red herring, it works on any AMM) with the help of Euler Finance positions.

3. MuSig2: Multisig with Schnorr (Propeller.io)

   This is not (yet) directly relevant for AMMs, but the lack of convenient multisig solutions is a great impediment for using crypto assets in traditional finance (eg for account recovery, admin accounts etc). Any advances in this area are important, especially in relation to Schnorr signature which are a very exciting topic on their own.

4. Schnorr basics (Propeller.io)

   Schnorr signatures – recently implemented into Bitcoin after their patent protection expired – are a very interesting new primitive to add to the crypto mix, and particular pertinent for financial applications.

Very interesting week at the research front as well. Vitalik’s comments on the vulnerability of cross-chain bridges are worth pondering over, Guillaume’s blog is excellent as usual, and the articles on Schnorr signatures and multisig are very enlightenting.

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