Automated Market-Making for Fiat Currencies
16 Pages Posted: 11 Oct 2021
Date Written: September 18, 2021
We present an automated market-making (AMM) cross-settlement mechanism for digital assets on inter-operable blockchains, focusing on central bank digital currencies (CBDCs) and stable coins. We develop an innovative approach for generating fair exchange rates for on-chain assets consistent with traditional off-chain markets. We illustrate the efficacy of our approach on realized FX rates for G-10 currencies.
Keywords: Cryptocurrencies, Automated Market Making, Decentralized Finance, Blockchain, Decentralized Exchanges, Central Bank Digital Currencies
JEL Classification: G14, G19
Suggested Citation: Suggested Citation