Silkswap: An asymmetric automated market maker model for stablecoins

TL;DR

Silkswap introduces an asymmetric automated market maker model optimized for stablecoin trading, featuring a novel invariant that reduces price impact and can be adapted for various stablecoin pairs.

Contribution

The paper presents the derivation and analysis of the Silkswap invariant, a new asymmetric AMM model, and compares its performance with existing models like Curve Finance.

Findings

Silkswap achieves minimal price impact in stablecoin trading.

The model's invariant can be efficiently solved using various numerical methods.

Silkswap outperforms or matches existing models like Curve Finance in key metrics.

Abstract

Silkswap is an automated market maker model designed for efficient stablecoin trading with minimal price impact. The original purpose of Silkswap is to facilitate the trading of fiat-pegged stablecoins with the stablecoin Silk, but it can be applied to any pair of stablecoins. The Silkswap invariant is a hybrid function that generates an asymmetric price impact curve. We present the derivation of the Silkswap model and its mathematical properties. We also compare different numerical methods used to solve the invariant equation. Finally, we compare our model with the well-known Curve Finance model.