What question did this study set out to answer?

To develop and evaluate an automated market maker mechanism that balances price slippage stability, arbitrage incentives, and capital efficiency across decentralized cryptocurrency exchange stakeholders.

January 1, 2026Blockchain Research and ApplicationsOpen Access

Balance on slippage and arbitrage opportunities of automated market makers for cryptocurrency exchange liquidity

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To develop and evaluate an automated market maker mechanism that balances price slippage stability, arbitrage incentives, and capital efficiency across decentralized cryptocurrency exchange stakeholders.
Proposed a virtual extension reverse proportion mechanism for automated market makers.
Compared the proposed model against standard constant product and constant mean market maker schemes.
Conducted experimental evaluations across both static and dynamic cryptocurrency market price conditions.
Achieved higher operational efficiency by requiring lower cryptocurrency capital investment from liquidity providers.
Significantly reduced price slippage rates for customers while preserving the controlled price differentials required to incentivize arbitrageurs.
Decreased investment opportunity costs and delivered greater overall exchange stability compared to conventional automated market maker designs.

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Implication

Computational analysis demonstrates improved price stability and preserved arbitrage in decentralized cryptocurrency exchanges, indicating enhanced liquidity and capital efficiency.

Cite This Study

Wen et al. (2026) studied this question.

synapsesocial.com/papers/6a7e1316fe8427622e953302 https://doi.org/10.1016/j.bcra.2026.100454

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Implication

Computational analysis demonstrates improved price stability and preserved arbitrage in decentralized cryptocurrency exchanges, indicating enhanced liquidity and capital efficiency.

Balance on slippage and arbitrage opportunities of automated market makers for cryptocurrency exchange liquidity

Key Points

Discussion

Implication

Cite This Study

Balance on slippage and arbitrage opportunities of automated market makers for cryptocurrency exchange liquidity

Key Points

Discussion

Implication

Cite This Study

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