An Analysis of Uniswap Markets

Cryptoeconomic Systems Journal, 2019

25 Pages Posted: 10 Jun 2020

See all articles by Guillermo Angeris

Guillermo Angeris

Stanford University

Hsien-Tang Kao

Gauntlet Networks

Rei Chiang

Gauntlet Networks

Charlie Noyes

Paradigm, Inc.

Tarun Chitra

Gauntlet Networks

Date Written: November 1, 2019

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.

Keywords: uniswap, economics, arbitrage, ethereum, analysis, agent-based simulation

Suggested Citation

Angeris, Guillermo and Kao, Hsien-Tang and Chiang, Rei and Noyes, Charlie and Chitra, Tarun, An Analysis of Uniswap Markets (November 1, 2019). Cryptoeconomic Systems Journal, 2019, Available at SSRN: https://ssrn.com/abstract=3602203

Guillermo Angeris (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

Hsien-Tang Kao

Gauntlet Networks ( email )

Rei Chiang

Gauntlet Networks ( email )

Charlie Noyes

Paradigm, Inc. ( email )

Tarun Chitra

Gauntlet Networks ( email )

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