Bancor v2.1: a single-sided automated market maker

The Block Research has recently explored various automated market maker (AMM) and constant function market maker (CFMM) designs and explained their popularity over traditional order books in the DeFi space. The monthly volume of decentralized exchanges (DEXes) has reached an all-time high at $162 billion in May 2021.

In the current implementation of Uniswap v2 and its clones such as SushiSwap and PancakeSwap, each isolated liquidity pool consists of two tokens. The ratio of the values of those two assets in a liquidity pool always maintains 50/50. Therefore, liquidity providers (LPs) need to supply both tokens to the pool in a 50/50 ratio to earn trading fees.