An Analysis of Uniswap Markets
Cryptoeconomic Systems Journal, 2019
25 Pages Posted: 10 Jun 2020
Date Written: November 1, 2019
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.
Keywords: uniswap, economics, arbitrage, ethereum, analysis, agent-based simulation
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