This week, Anna & Tarun take an in-depth look into AMMs with Guillermo Angeris, a PhD student in Stanford who co-authored a number of papers on fundamental AMM properties. They chat about how his work on Optimization Theory and Inverse Design can be applied to a DeFi context, as well as his most recent paper deals with privacy in AMMs, effectively demonstrating how superficial attempts at making a private AMM are doomed.
During the conversation, Anna, Tarun and Guillermo chat about why AMMs today are so revolutionary and unique in the financial world, and why their success can be explained by optimization theory and convexity. But AMMs also have a number of shortcomings like front-running and impermanent loss, where Guillermo’s PhD work may just help find the solution.
Aave is an open source, decentralised non-custodial liquidity protocol on Ethereum.
With Aave, users can participate as depositors meaning they provide liquidity to earn a passive income. or they can also act as borrowers to borrow in an overcollateralized way or undercollateralized way (think: one-block liquidity Flash Loan).
Aave just released an AMM Market where Uniswap and Balancer LPs can use their LP tokens as collateral. New types of collateral and AMM protocols can be added through the Aave Governance process as well.
