Uniswap Liquidity Provision: An Online Learning Approach

Yogev Bar-On*, Yishay Mansour

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

Uniswap v3 is a decentralized exchange (DEX) that allows liquidity providers to allocate funds more efficiently by specifying an active price interval for their funds. This introduces the problem of finding an optimal strategy for choosing price intervals. We formalize this problem as an online learning problem with non-stochastic rewards. We use regret-minimization methods to show a Liquidity Provision strategy that guarantees a lower bound on the reward. This is true even for non-stochastic changes to asset pricing, and we express this bound in terms of the trading volume and the average price change.

Original languageEnglish
Title of host publicationFinancial Cryptography and Data Security. FC 2023 International Workshops - Voting, CoDecFin, DeFi, WTSC, Revised Selected Papers
EditorsAleksander Essex, Shin’ichiro Matsuo, Oksana Kulyk, Lewis Gudgeon, Ariah Klages-Mundt, Daniel Perez, Sam Werner, Andrea Bracciali, Geoff Goodell
PublisherSpringer Science and Business Media Deutschland GmbH
Pages247-261
Number of pages15
ISBN (Print)9783031488054
DOIs
StatePublished - 2024
Event27th International Conference on Financial Cryptography and Data Security, FC 2023 - Bol, Croatia
Duration: 1 May 20235 May 2023

Publication series

NameLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
Volume13953 LNCS
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349

Conference

Conference27th International Conference on Financial Cryptography and Data Security, FC 2023
Country/TerritoryCroatia
CityBol
Period1/05/235/05/23

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