SoK: Decentralized Exchanges (DEX) with Automated Market Maker (AMM) Protocols

Xu, Jiahua; Vavryk, Nazariy; Paruch, Krzysztof; Cousaert, Simon

doi:10.1145/3570639

Cited by 67 publications

(24 citation statements)

References 101 publications

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“…1) AMM-based DEXs: Different from order book-based exchanges where a trade has both buy and sell sides, AMM-based exchanges-often simply referred to as AMM-leverage an algorithm termed "conservation function" to determine the swap rate between two assets given the swap tokens and size [130]. As illustrated in Figure 3a, traders using an AMMbased DEX swap their tokens against the exchange protocol's liquidity pool, which contains tokens deposited by liquidity providers (LPs).…”

Section: Defi Primitive Layermentioning

confidence: 99%

“…a) Deposit: Protocol users simply select their favored yield farming pool and deposit their funds by transferring token assets to the pool smart contract. In return, users receive pool tokens as a form of IOU which should increase in value with the passage of time due to the yield farmed by the protocol [130], [100].…”

Section: B Yield Farming Operationsmentioning

confidence: 99%

“…These can be governance tokens or other kinds of tokens. One example is the liquidity provider tokens in AMM-based DEXs [130]. By supplying liquidity into an AMM pool, users receive the fees that are paid by traders within that pool.…”

Section: Sources Of Yield 1) Supply Interestmentioning

confidence: 99%

“…2) Rug pull: A rug pull refers to the abandonment of a project by the project administrator after collecting investor's funds, leaving investors with valueless assets [130], [118]. One way of conducting this type of scam is to lure yield farming protocols into buying assets with no value and then swap this asset for ETH or another type of asset with value.…”

Section: A Security Risksmentioning

confidence: 99%

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Reap the Harvest on Blockchain: A Survey of Yield Farming Protocols

Feng

2023

IEEE Trans. Netw. Serv. Manage.

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Yield farming represents an immensely popular asset management activity in decentralized finance (DeFi). It involves supplying, borrowing, or staking crypto assets to earn an income in forms of transaction fees, interest, or participation rewards at different DeFi marketplaces. In this systematic survey, we present yield farming protocols as an aggregationlayer constituent of the wider DeFi ecosystem that interact with primitive-layer protocols such as decentralized exchanges (DEXs) and protocols for loanable funds (PLFs). We examine the yield farming mechanism by first studying the operations encoded in the yield farming smart contracts, and then performing stylized, parameterized simulations on various yield farming strategies. We conduct a thorough literature review on related work, and establish a framework for yield farming protocols that takes into account pool structure, accepted token types, and implemented strategies. Using our framework, we characterize major yield aggregators in the market including Yearn Finance, Beefy, and Badger DAO. Moreover, we discuss anecdotal attacks against yield aggregators and generalize a number of risks associated with yield farming.

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Section: Defi Primitive Layermentioning

confidence: 99%

Section: B Yield Farming Operationsmentioning

confidence: 99%

Section: Sources Of Yield 1) Supply Interestmentioning

confidence: 99%

Section: A Security Risksmentioning

confidence: 99%

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Reap the Harvest on Blockchain: A Survey of Yield Farming Protocols

Feng

2023

IEEE Trans. Netw. Serv. Manage.

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“…Slippage measures the discrepancy between the internal exchange rate and the actual ratio between the amounts of output and input tokens obtained upon the swap [XVPC22]:…”

Section: Prices Exchange Rates and Net Worthmentioning

confidence: 99%

A theory of Automated Market Makers in DeFi

Bartoletti¹,

Chiang²,

Lafuente³

2022

Logical Methods in Computer Science

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Automated market makers (AMMs) are one of the most prominent decentralized finance (DeFi) applications. AMMs allow users to trade different types of crypto-tokens, without the need to find a counter-party. There are several implementations and models for AMMs, featuring a variety of sophisticated economic mechanisms. We present a theory of AMMs. The core of our theory is an abstract operational model of the interactions between users and AMMs, which can be concretised by instantiating the economic mechanisms. We exploit our theory to formally prove a set of fundamental properties of AMMs, characterizing both structural and economic aspects. We do this by abstracting from the actual economic mechanisms used in implementations, and identifying sufficient conditions which ensure the relevant properties. Notably, we devise a general solution to the arbitrage problem, the main game-theoretic foundation behind the economic mechanisms of AMMs.

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Promise of Zero‐Knowledge Proofs (ZKPs) for Blockchain Privacy and Security: Opportunities, Challenges, and Future Directions

Chirakarotu Nair,

Kumar Panakalapati

2024

Security and Privacy

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Blockchain technology has revolutionized data sharing and storage, yet maintaining privacy and security while ensuring transparency and immutability remains a significant challenge. This research addresses this challenge by investigating the promising solution of Zero‐Knowledge Proofs (ZKPs), which allow for validation without revealing additional information. Unlike previous studies that focus on specific ZKP types or limited performance metrics, this article provides a comprehensive analysis of multiple ZKP technologies, along with their distinct features and blockchain applications. We evaluate ZKP tools such as snarkjs, ZoKrates, and Circom, focusing on key factors including proof size, trusted setup, prover time, verifier time, and scalability. A detailed case study on the Ethereum blockchain demonstrates the practical implementation and performance of ZKPs, effectively bridging the gap between theoretical analysis and real‐world applications. Furthermore, we explore how ZKPs can significantly enhance scalability in blockchain applications. By proposing innovative ZKP use cases and addressing current challenges, this article not only provides a comprehensive understanding of ZKP technologies but also outlines potential future research directions, making a significant impact on the field of blockchain privacy and security.

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SoK: Decentralized Exchanges (DEX) with Automated Market Maker (AMM) Protocols

Cited by 67 publications

References 101 publications

Reap the Harvest on Blockchain: A Survey of Yield Farming Protocols

Reap the Harvest on Blockchain: A Survey of Yield Farming Protocols

A theory of Automated Market Makers in DeFi

Promise of Zero‐Knowledge Proofs (ZKPs) for Blockchain Privacy and Security: Opportunities, Challenges, and Future Directions

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