EconCS Seminar

 

Lecturer: 

Nir Chemaya (BGU)

Title: 

CLVR Ordering of Transactions on AMMs

Abstract: 

This paper introduces a trade ordering rule that aims to reduce intra-block price volatility in Automated Market Maker (AMM) powered decentralized exchanges. The ordering rule introduced here, Clever Look-ahead Volatility Reduction (CLVR), operates under the (common) framework in decentralized finance that allows some entitiesto observe trade requests before they are settled, assemble them into “blocks”, and order them as they like. On AMM exchanges, asset pricesare continuously and transparently updated as a result of each tradeand therefore, transaction order has high financial value. CLVR aims to order transactions for traders’ benefit. Our primary focus is intra-block price stability (minimizing volatility), which has two main benefits fortraders: it reduces transaction failure rate and allows traders to receive closer prices to the reference price at which they submit their transactions accordingly. We show that CLVR constructs an ordering which approximately minimizes price volatility with a small computation cost and can be trivially verified externally.

Location: 

Elath Hall, Feldman Building, Edmond J. Safra Campus.

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