Bell Curve
AMMs vs DEXs: DeFi's First Debate Revisited | Season 6 Episode 3
Oct 10, 2023
Eugene Chen, co-founder of Ellipsis Labs, and Doug Colkitt, co-founder of Crocodile Labs, discuss the evolving world of onchain trading and DEX designs, exploring factors like gas costs, latency, and modular "hooks". They debate the advantages of taking DEX components offchain and discuss the end game of DEX design.
01:16:17
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Podcast summary created with Snipd AI
Quick takeaways
- AMMs offer simplicity and low barriers for retail liquidity providers, while limit order books offer more options but require more sophisticated providers.
- Moving components off-chain brings privacy and execution quality benefits, but also carries centralization risks and challenges decentralization principles.
Deep dives
AMMs and limit order books are liquidity primitives for different environments
AMMs, designed for Ethereum mainnet, offer simplicity and low barriers for retail liquidity providers. They limit choices for liquidity providers but are still better for retail liquidity providers due to lower costs. On the other hand, limit order books, which come from centralized exchanges, offer more options for liquidity providers in terms of pricing and order types. However, they require more sophisticated liquidity providers and are not as suitable for gas-constrained environments. The end game may involve a mix of AMMs and limit order books in the on-chain DeFi space.
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