An analysis of Uniswap markets

Guillermo Angeris, Hsien-Tang Kao, Rei Chiang, Charlie Noyes and Tarun Chitra

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Abstract: Uniswap -- and other constant product markets -- appear to work well in practice despite their simplicity. In this paper, we give a simple formal analysis of constant product markets and their generalizations, showing that, under some common conditions, these markets must closely track the reference market price. We also show that Uniswap satisfies many other desirable properties and numerically demonstrate, via a large-scale agent-based simulation, that Uniswap is stable under a wide range of market conditions.

Date: 2019-11, Revised 2021-02
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1911.03380

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