Automated Market Making for Goods with Perishable Utility
Chengqi Zang, Gabriel P. Andrade, O\u{g}uzhan Ersoy

TL;DR
This paper introduces an automated market maker for perishable utility goods, specifically compute resources, which ensures transparent pricing, incentive alignment, and bounded regret in decentralized markets.
Contribution
It designs a novel AMM mechanism for time-sensitive compute markets with proven equilibrium properties and incentive-compatible provider strategies.
Findings
Existence and uniqueness of equilibrium quotes established
Mechanism ensures active supply exceeds demand under certain conditions
CFM rule achieves bounded worst-case regret
Abstract
We study decentralized markets for goods whose utility perishes in time, with compute as a primary motivation. Recent advances in reproducible and verifiable execution allow jobs to pause, verify, and resume across heterogeneous hardware, which allow us to treat compute as time indexed capacity rather than bespoke bundles. We design an automated market maker (AMM) that posts an hourly price as a concave function of load--the ratio of current demand to a "floor supply" (providers willing to work at a preset floor). This mechanism decouples price discovery from allocation and yields transparent, low latency trading. We establish existence and uniqueness of equilibrium quotes and give conditions under which the equilibrium is admissible (i.e. active supply weakly exceeds demand). To align incentives, we pair a premium sharing pool (base cost plus a pro rata share of contemporaneous…
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Taxonomy
TopicsAuction Theory and Applications · Distributed systems and fault tolerance · Blockchain Technology Applications and Security
