English

Concentrated Liquidity in Automated Market Makers

Trading and Market Microstructure 2023-10-30 v1

Abstract

We examine how the introduction of concentrated liquidity has changed the liquidity provision market in automated market makers such as Uniswap. To this end, we compare average liquidity provider returns from trading fees before and after its introduction. Furthermore, we quantify the performance of a number of fundamental concentrated liquidity strategies using historical trade data. We estimate their possible returns and evaluate which perform best for certain trading pairs and market conditions.

Keywords

Cite

@article{arxiv.2110.01368,
  title  = {Concentrated Liquidity in Automated Market Makers},
  author = {Robin Fritsch},
  journal= {arXiv preprint arXiv:2110.01368},
  year   = {2023}
}