Is passive market making profitable?

DeFi ProtocolsSeptember 9, 2021, 5:36AM EDT
UPDATED: March 7, 2022, 1:20PM EST
Is passive market making profitable?
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Decentralized exchanges (DEXes) are experiencing rapid growth in the last 12 months, with DEX monthly volume exceeding $162 billion in May 2021. Instead of order books, most DEXes adopt the automated market maker (AMM) design bootstrapping passive and algorithmic liquidity into liquidity pools that enable market takers with any trading size to trade against. 

For a detailed overview of various AMM designs, see this research piece.

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