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demand-modulated-markets's Introduction

Demand Modulated Markets

SmartWeave contract implementation of demand modulated markets

This codebase is an experimental implementation of a DMM built into a typical SmartWeave token contract. It is UNAUDITED and majorly UNTESTED, so use at your own risk.

AMMs vs DMMs

AMM DMM
Automated Market Makers (AMMs) operate by algorithmically modifying the buy and sell price of an asset based on the supply of its trading pair in a liquidity pool. Demand Modulated Markets (DMMs) operate by algorithmically modifying the buy price, sell price, and total supply of an asset based on the demand of the market.

Implications

  • Token liquidity can scale proportionally and infinitely to demand
  • Prevents the need for liquidity providers and eliminates risk of “rug pulls” by withdrawing liquidity
  • A “risk profile” can be defined by the curve of the DMM
  • Trading liquidity distributed to each asset individually instead of being managed by a single smart contract

Use cases

  • Optimal for fungible and nonfungible tokens that would traditionally be considered illiquid and thus have difficulty trading in an open market

Contributing

Feel free to submit a pull request or open an issue.

demand-modulated-markets's People

Contributors

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