AI Trading Phenomenon: do the models self-regulate and FOMO hits the limit?
Trading continues actively. The search for the cash button hasn't stopped. Models operate short cycles — average 20-48h per trade.
While Chinese AIs are showing +30–40% ROI and accumulating gains 📈, GPT-based systems are in a drawdown of 80% in two weeks😄
DeepSeek trades on 3-minute candles, but hold times stretch to 2–3 hours — it checks every 3 min for exit signals, so positions stay open until the condition triggers. Qwen models prefer 4-hour swings.
AI models are learning to trade smarter and keep it steady🧠 , while Elon’s rocket just pulled a U-turn to the downside 😄
Trading continues actively. The search for the cash button hasn't stopped. Models operate short cycles — average 20-48h per trade.
While Chinese AIs are showing +30–40% ROI and accumulating gains 📈, GPT-based systems are in a drawdown of 80% in two weeks😄
DeepSeek trades on 3-minute candles, but hold times stretch to 2–3 hours — it checks every 3 min for exit signals, so positions stay open until the condition triggers. Qwen models prefer 4-hour swings.
AI models are learning to trade smarter and keep it steady
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📚 Did you like chemistry at school?
👉🏻Periodic Table of Token Utility from New Tracker. Your Useful Guide from Goblin Team😀
Valueverse mapped token economies into six key Value Capture Mechanics (VCM) — integrating demand-side and coordination layers.
Any legitimate project can be described as a mix of these value origins:
1️⃣ Value Transfer — gas, payments, fees, redirections.
2️⃣ Future Cashflow — rev-share, restaking, liquidity mining.
3️⃣ Governance — distribution of limited resources, DAO, voting, ve-mechanics.
4️⃣ Access — gated resources, membership tiers, feature limits.
5️⃣ Representation — token = claim/share/external asset (RWA).
6️⃣ Hedonic Value — memes, culture, community.
7️⃣ Risk Exposure — deliberate risk-taking (of alienation or depreciation) as value precondition.
8️⃣ Conditional Action — required actions or expenses (e.g., voting) to activate value of other OoV.
Each period is made of functional cells — modules like work tokens, discount or membership tokens — defining how value is captured.
🔍 How to apply it
[#1] Map utility
Mark all current token uses (no future ):
— Is there a transactional role?
— Are there cash flows to holders?
— What exactly is being voted on, and how binding is it?
— What access does the token provide, and how is it different from a regular subscription?
— What does the token represent: an on-chain share/asset, or a meta-value?
[#2] Depth vs. Breadth
Depth = execution strength (volumes, retention, repeating).
Breadth = number of independent mechanisms.
🙅♂️ Many shallow cells = diluted utility.
[#3] Connectivity
Are cashflows real? Does governance impact them? Any compliance risks? Where are the main points of failure (regulators, oracles, revenue concentration)?
➡️ Compare with data — remove wishful thinking.
The result after 3 steps is a powerful tool for token analysis and design — decomposition of any token -> source of value (network, asset, service) + manifestation path (how the token captures it) + implementation.
🧠 Why It matters
Teams —> identify missing mechanics in tokenomics.
Traders/MMs —> see sustainable cashflow sources and where it would be a liquidity delay.
Communities —> separate real utility from hype.
👉🏻Periodic Table of Token Utility from New Tracker. Your Useful Guide from Goblin Team
Valueverse mapped token economies into six key Value Capture Mechanics (VCM) — integrating demand-side and coordination layers.
Any legitimate project can be described as a mix of these value origins:
1️⃣ Value Transfer — gas, payments, fees, redirections.
2️⃣ Future Cashflow — rev-share, restaking, liquidity mining.
3️⃣ Governance — distribution of limited resources, DAO, voting, ve-mechanics.
4️⃣ Access — gated resources, membership tiers, feature limits.
5️⃣ Representation — token = claim/share/external asset (RWA).
6️⃣ Hedonic Value — memes, culture, community.
7️⃣ Risk Exposure — deliberate risk-taking (of alienation or depreciation) as value precondition.
8️⃣ Conditional Action — required actions or expenses (e.g., voting) to activate value of other OoV.
Each period is made of functional cells — modules like work tokens, discount or membership tokens — defining how value is captured.
🔍 How to apply it
[#1] Map utility
Mark all current token uses (
— Is there a transactional role?
— Are there cash flows to holders?
— What exactly is being voted on, and how binding is it?
— What access does the token provide, and how is it different from a regular subscription?
— What does the token represent: an on-chain share/asset, or a meta-value?
[#2] Depth vs. Breadth
Depth = execution strength (volumes, retention, repeating).
Breadth = number of independent mechanisms.
[#3] Connectivity
Are cashflows real? Does governance impact them? Any compliance risks? Where are the main points of failure (regulators, oracles, revenue concentration)?
➡️ Compare with data — remove wishful thinking.
The result after 3 steps is a powerful tool for token analysis and design — decomposition of any token -> source of value (network, asset, service) + manifestation path (how the token captures it) + implementation.
🧠 Why It matters
Teams —> identify missing mechanics in tokenomics.
Traders/MMs —> see sustainable cashflow sources and where it would be a liquidity delay.
Communities —> separate real utility from hype.
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Good and comprehensive examples for our community:
Bitcoin — network security through PoW + scarcity + burning. VT OoV works as a peer-to-peer payment medium for goods/services outside the protocol layer and transaction processing.
Ethereum — internal consumption (gas, blockspace purchase, deflationary burn).
Jupiter — staking → governance proposals, such as budget decisions, tokenomics, or launchpad project approvals → active rewards and unlocks (risk → action of voting → cashflow).
GOBLIN CRYPTO FUND
Bitcoin — network security through PoW + scarcity + burning. VT OoV works as a peer-to-peer payment medium for goods/services outside the protocol layer and transaction processing.
BTC is a native token and electronic money.
Ethereum — internal consumption (gas, blockspace purchase, deflationary burn).
ETH is a deflationary native and consensus token VCM.
Jupiter — staking → governance proposals, such as budget decisions, tokenomics, or launchpad project approvals → active rewards and unlocks (risk → action of voting → cashflow).
JUP’s mechanism is based on indirect dividends and yield-bearing governance stake.
GOBLIN CRYPTO FUND
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👀What’s Up with the Market? Crypto Went to Sleep.
As we anticipated in earlier posts, the [sell the fact] move played out right on schedule. A couple of days ago, Bitcoin broke below $100K, and Solana slid under $150. The market has weakened — momentum’s fading, and we’re likely probing the bottom. Yes, some alts already appear heavily oversold based on volume metrics.
We’ve noticed more than once, the domino effect starts with U.S. indices as a bench for other markets. If equities fall further, crypto likely drop by a multiple. Capital flows and investor risk appetite remain the key drivers, and both are cooling off fast. That’s why we see such a strong correlation.
😁Watch the S&P500 — Bitcoin still takes its cues from Wall Street.
NO FINANCIAL ADVICE.
As we anticipated in earlier posts, the [sell the fact] move played out right on schedule. A couple of days ago, Bitcoin broke below $100K, and Solana slid under $150. The market has weakened — momentum’s fading, and we’re likely probing the bottom. Yes, some alts already appear heavily oversold based on volume metrics.
We’ve noticed more than once, the domino effect starts with U.S. indices as a bench for other markets. If equities fall further, crypto likely drop by a multiple. Capital flows and investor risk appetite remain the key drivers, and both are cooling off fast. That’s why we see such a strong correlation.
😁Watch the S&P500 — Bitcoin still takes its cues from Wall Street.
NO FINANCIAL ADVICE.
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Oh fam, did everyone manage to stock up and prepare their positions for the pre-Christmas sale from the main crypto old man?
▪️ The shutdown is nearing completion.
▪️James Wynn, how are you feeling?
12 liquidations in the last 12 hours!😐
He's accumulated a bit of debt and has left the rank of the unrealized billionaire💸
Just remember, FOMO is dangerous for your financial portfolio and mental health👀
▪️ Meanwhile, China is doing well after concluding precious metal deals with the U.States🤝
Stay tuned…
▪️ The shutdown is nearing completion.
▪️James Wynn, how are you feeling?
12 liquidations in the last 12 hours!
He's accumulated a bit of debt and has left the rank of the unrealized billionaire💸
Just remember, FOMO is dangerous for your financial portfolio and mental health👀
▪️ Meanwhile, China is doing well after concluding precious metal deals with the U.States🤝
Stay tuned…
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Crypto ETFs: why they matter, how they move the market, and what the retrospective shows.
1️⃣ Why ETFs?
Institutions request BTC/ETH/SOL in a regulated, brokerage-friendly format.
Spot ETFs provide them:
• access without wallets or custody
• clean reporting & compliance
• ability to include BTC/ETH/SOL in fund mandates and strat portfolios
2️⃣ How ETF flows move price
A spot BTC ETF is basically a constant spot buyer when inflows are positive.
Strong net inflows → reduced free supply → higher price sensitivity.
That’s why record ETF inflows have aligned with new BTC ATHs in August and early October 2025.
ETH ETFs show the same pattern: exceeding $115–125k by BTC as early as 2025 was accompanied by multi-day ETH inflows in the hundreds of millions. That has triggered local rallies.
3️⃣ Volumes are already rivaling exchanges
US spot BTC ETFs now trade around $5.8B daily, ~7.2% of Binance’s BTC spot volume.
Total ETF AUM has already surpassed $143B. Liquidity is no longer an add-on — it’s part of price discovery.
👉🏻What changed in the last 24 months?
Integrating Coinglass & SoSoValue data with industry statistics we see:
• Demand shifted from CEX/derivatives → regulated ETF rails
• Price cycles sped up as ETF inflows/outflows amplified moves: during reversals, we see synchronous outflows and increased volatility, which is confirmed by liquidations.
• Liquidity became institutional: ETFs now compete with top exchanges
👀 Real insights👀
As long as net inflows stay positive, BTC, ETH & SOL remain in structural supply deficit. The beta of coins to all the news about ETF regulation is high.
Large outflows can flip ETFs from a liquidity vacuum into a fire hose — accelerating corrections. Funds fix & flow into other asset classes.
Institutions request BTC/ETH/SOL in a regulated, brokerage-friendly format.
Spot ETFs provide them:
• access without wallets or custody
• clean reporting & compliance
• ability to include BTC/ETH/SOL in fund mandates and strat portfolios
A spot BTC ETF is basically a constant spot buyer when inflows are positive.
Strong net inflows → reduced free supply → higher price sensitivity.
That’s why record ETF inflows have aligned with new BTC ATHs in August and early October 2025.
ETH ETFs show the same pattern: exceeding $115–125k by BTC as early as 2025 was accompanied by multi-day ETH inflows in the hundreds of millions. That has triggered local rallies.
US spot BTC ETFs now trade around $5.8B daily, ~7.2% of Binance’s BTC spot volume.
Total ETF AUM has already surpassed $143B. Liquidity is no longer an add-on — it’s part of price discovery.
👉🏻What changed in the last 24 months?
Integrating Coinglass & SoSoValue data with industry statistics we see:
• Demand shifted from CEX/derivatives → regulated ETF rails
• Price cycles sped up as ETF inflows/outflows amplified moves: during reversals, we see synchronous outflows and increased volatility, which is confirmed by liquidations.
• Liquidity became institutional: ETFs now compete with top exchanges
As long as net inflows stay positive, BTC, ETH & SOL remain in structural supply deficit. The beta of coins to all the news about ETF regulation is high.
Large outflows can flip ETFs from a liquidity vacuum into a fire hose — accelerating corrections. Funds fix & flow into other asset classes.
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Meanwhile, SOL's market cap and price have returned to June 2025 levels.
Aster launched the fourth epoch, which is less liquid than the second and third ones. Look closely - it's a repeat of the same story. During their first epoch, volumes were low, and traders on the leaderboard got the sweet spot: you deposit $1k, take a leverage, flip a couple of million, and you've got 300k $ASTER as no one caught on🤔 .
The classic perps have quieted down a bit. Now we haven’t entirely new trend from the father of TG and TON -> decentralized AI networks in collaboration with Doronichev.
And then we really thought about the AI PERP DEXs. Execution of trade transactions through AI agent? More features?
What are you thinking?
Aster launched the fourth epoch, which is less liquid than the second and third ones. Look closely - it's a repeat of the same story. During their first epoch, volumes were low, and traders on the leaderboard got the sweet spot: you deposit $1k, take a leverage, flip a couple of million, and you've got 300k $ASTER as no one caught on
The classic perps have quieted down a bit. Now we haven’t entirely new trend from the father of TG and TON -> decentralized AI networks in collaboration with Doronichev.
And then we really thought about the AI PERP DEXs. Execution of trade transactions through AI agent? More features?
What are you thinking?
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#AI #agents
New Market Making Partnership⚡️
We’re excited to announce our new TREND collaboration.
Project highlights:
Top 931 CMC 🔝
Market Cap: $12M 💣
Project Type: DeFAI🧠
Chain: SOL🪙
CEX: XT.COM | MEXC | Gate | KuCoin | Toobit | Bitget📊
DEX: Raydium | Meteora | Orca📊
Goblin — a professional MM service. Helping projects make profits, scale liquidity, improve order book dynamics, and achieve sustainable market growth.
Stay tuned — exciting things are coming⚡️
New Market Making Partnership
We’re excited to announce our new TREND collaboration.
Project highlights:
Top 931 CMC 🔝
Market Cap: $12M 💣
Project Type: DeFAI
Chain: SOL
CEX: XT.COM | MEXC | Gate | KuCoin | Toobit | Bitget
DEX: Raydium | Meteora | Orca
Goblin — a professional MM service. Helping projects make profits, scale liquidity, improve order book dynamics, and achieve sustainable market growth.
Stay tuned — exciting things are coming⚡️
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Dear community ⚡️
Goblin is now actively expanding its partner network, and we're ready to inform you that starting from January 1, 2026, the base price of our MM services will be increased for NEW clients.
This change reflects the growing demand for high-quality service, increasing operational costs, and our commitment to delivering reliable performance in a rapidly evolving crypto market.
We remain dedicated to transparency, security and long-term value. We’re incredibly grateful for your continuous support and are working on new features that will bring even more value to your experience.
👉🏻If you have any questions, feel free to reach out to our team.
Stay with us🚀
Goblin is now actively expanding its partner network, and we're ready to inform you that starting from January 1, 2026, the base price of our MM services will be increased for NEW clients.
This change reflects the growing demand for high-quality service, increasing operational costs, and our commitment to delivering reliable performance in a rapidly evolving crypto market.
We remain dedicated to transparency, security and long-term value. We’re incredibly grateful for your continuous support and are working on new features that will bring even more value to your experience.
👉🏻If you have any questions, feel free to reach out to our team.
Stay with us🚀
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#BullishMomentum
👉🏻With overall liquidity in the financial system deteriorating, should we anticipate a near-term stabilization, or is it still premature?
Let’s take a look at a couple of key indicators and the behavior of major players.
👉🏻With overall liquidity in the financial system deteriorating, should we anticipate a near-term stabilization, or is it still premature?
Let’s take a look at a couple of key indicators and the behavior of major players.
🤔5👀1
It finally feels like we’ve moved past the phase of local liquidity alignment — and that’s usually the moment when risk assets and alts wake up. So what caught our attention first? A mix of macro signals, equities, and crypto flows.
🏛 Macro: the shift is already happening
Everyone’s debating whether the Fed will cut in December. During the shutdown markets were fully pricing in easing — but right after, Fed officials flipped hawkish again, triggering a sharp selloff.
Yet within a month expectations for easing back to 3.5–3.75% recovered, and dip-buying returned.
Reverse Repo has collapsed to multi-year lows since September — banks are no longer parking spare liquidity at the Fed. The mechanism for draining liquidity is basically broken. Money is tight.
Labor market? Stabilizing. November NFP came in strong: +119K vs +53K expected, unemployment barely moved (4.4% vs 4.3%). That’s a positive bullish direction.
📈 Equities: early sparks
After portfolio rebalancing and forced stock cashout by managers, big tech is still flexing.
NVIDIA beat expectations for Q4 FY2025 with 93% YoY growth in data-center segment, pushing revenue +3.8% and EPS +4%. Even with a temporary bear market, AI demand isn’t slowing.
S&P 500 and NASDAQ, which historically move in sync, have been climbing steadily since Nov 28 (+0.54% / +0.65% today). Green light at the end of the tunnel.
🔥 Crypto: Solana leads the flow
Since the Solana ETF launch, we’ve barely seen any outflows. Net inflows have hit $619M — about 1% of SOL’s $80B market cap — all since Oct 28.
Two clear patterns compared with the price movement:
▪️Buyers accelerate as SOL resumes its uptrend.
▪️Market cooling with strong price drops -> Institutions stay patient on big dips, waiting for perfect entries.
Daily active Solana addresses are climbing too — 2–2.5M on average.
Meanwhile, the memecoin machine keeps printing: 5+ new Solana meme tokens launched every minute — most of them with zero fundamentals.
But the key: Solana’s infrastructure has evolved. Creating a token today is cheap like dirt🫠 and instant, so retail prefers launching its own contracts rather than gambling on someone else’s and to be a naked pro with a skill gap in 2-3 years. This shift is driving actual activity — not just chasing the next 100x hype coin.
📉 Dollar weakening ahead?
We expect further DXY softening. No major macro data is coming before the next Fed meeting — making the bullish scenario for the next few months increasingly likely.
🏛 Macro: the shift is already happening
Everyone’s debating whether the Fed will cut in December. During the shutdown markets were fully pricing in easing — but right after, Fed officials flipped hawkish again, triggering a sharp selloff.
Yet within a month expectations for easing back to 3.5–3.75% recovered, and dip-buying returned.
Reverse Repo has collapsed to multi-year lows since September — banks are no longer parking spare liquidity at the Fed. The mechanism for draining liquidity is basically broken. Money is tight.
Labor market? Stabilizing. November NFP came in strong: +119K vs +53K expected, unemployment barely moved (4.4% vs 4.3%). That’s a positive bullish direction.
📈 Equities: early sparks
After portfolio rebalancing and forced stock cashout by managers, big tech is still flexing.
NVIDIA beat expectations for Q4 FY2025 with 93% YoY growth in data-center segment, pushing revenue +3.8% and EPS +4%. Even with a temporary bear market, AI demand isn’t slowing.
S&P 500 and NASDAQ, which historically move in sync, have been climbing steadily since Nov 28 (+0.54% / +0.65% today). Green light at the end of the tunnel.
🔥 Crypto: Solana leads the flow
Since the Solana ETF launch, we’ve barely seen any outflows. Net inflows have hit $619M — about 1% of SOL’s $80B market cap — all since Oct 28.
Two clear patterns compared with the price movement:
▪️Buyers accelerate as SOL resumes its uptrend.
▪️Market cooling with strong price drops -> Institutions stay patient on big dips, waiting for perfect entries.
Daily active Solana addresses are climbing too — 2–2.5M on average.
Meanwhile, the memecoin machine keeps printing: 5+ new Solana meme tokens launched every minute — most of them with zero fundamentals.
But the key: Solana’s infrastructure has evolved. Creating a token today is cheap like dirt🫠 and instant, so retail prefers launching its own contracts rather than gambling on someone else’s and to be a naked pro with a skill gap in 2-3 years. This shift is driving actual activity — not just chasing the next 100x hype coin.
📉 Dollar weakening ahead?
We expect further DXY softening. No major macro data is coming before the next Fed meeting — making the bullish scenario for the next few months increasingly likely.
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#ChainService #RWA
Market Making Partnership⚡️
We’re excited to announce our new collaboration.
Project highlights:
Top 1630 CMC 🔝
Market Cap: $2.6M 💣
Project Type: Chain Service🧠
Chain:🔠 🔠 🔠
CEX: KuCoin | MEXC | Gate | CoinEx📊
DEX: Uniswap V3 🦄
Goblin — a professional MM service. Helping projects make profits, scale liquidity, improve order book dynamics, and achieve sustainable market growth.
Stay tuned — exciting things are coming⚡️
Market Making Partnership
We’re excited to announce our new collaboration.
Project highlights:
Top 1630 CMC 🔝
Market Cap: $2.6M 💣
Project Type: Chain Service🧠
Chain:
CEX: KuCoin | MEXC | Gate | CoinEx
DEX: Uniswap V3 🦄
Goblin — a professional MM service. Helping projects make profits, scale liquidity, improve order book dynamics, and achieve sustainable market growth.
Stay tuned — exciting things are coming⚡️
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Polymarket. The core infrastructure. The financialization of information in 2026.
The world’s largest decentralized prediction market runs on Polygon, settles in USDC, and updates probabilities every second.
It turns real-world events into tradable on-chain markets — pure information, priced by liquidity and brand.
The real shift is the AI oracle narrative: collecting, analysis, interpretation of data from the outside world and transfer of the result to smart contracts.
AI oracles will redefine how prediction markets scale:
▪️resolve controversial outcomes
▪️filter the manipulation & misinformation
▪️remove human bias from market settlement
This unlocks markets around elections, geopolitics, macro, and tech — areas where traditional oracles fail.
Layer on top:
• AI trading agents operating 24/7
• future primitives: synthetic leverage, lending, structured exposure to event risk
Institutional capital is already positioning.
→ ICE (NYSE owner) invested $2B, valuing Polymarket at $9B.
→ CEO Shayne Coplan joined the CEO Innovation Council. This guy really knows how to create high-profile events closely related to specific people or top IT companies. We regularly see insiders in news, he is clearly fumbling for marketing.
→ breakout growth during US elections despite regulatory headwinds like a proven stress test.
Distribution expanded 👉🏻on Dec 4, MetaMask integrated Polymarket directly into the wallet with on-chain event futures or options:
▪️one-click access to on-chain predictions
▪️cross-chain funding
▪️extra user rewards driving activity
The thesis: Prediction markets + AI + DeFi rails. This isn’t gambling — it’s financializing information. Bet on the growth of AI-resolved, on-chain reality markets & earning on product releases. A multi-cycle infrastructure bet.
The world’s largest decentralized prediction market runs on Polygon, settles in USDC, and updates probabilities every second.
It turns real-world events into tradable on-chain markets — pure information, priced by liquidity and brand.
The real shift is the AI oracle narrative: collecting, analysis, interpretation of data from the outside world and transfer of the result to smart contracts.
AI oracles will redefine how prediction markets scale:
▪️resolve controversial outcomes
▪️filter the manipulation & misinformation
▪️remove human bias from market settlement
This unlocks markets around elections, geopolitics, macro, and tech — areas where traditional oracles fail.
Layer on top:
• AI trading agents operating 24/7
• future primitives: synthetic leverage, lending, structured exposure to event risk
Institutional capital is already positioning.
→ ICE (NYSE owner) invested $2B, valuing Polymarket at $9B.
→ CEO Shayne Coplan joined the CEO Innovation Council. This guy really knows how to create high-profile events closely related to specific people or top IT companies. We regularly see insiders in news, he is clearly fumbling for marketing.
→ breakout growth during US elections despite regulatory headwinds like a proven stress test.
Distribution expanded 👉🏻on Dec 4, MetaMask integrated Polymarket directly into the wallet with on-chain event futures or options:
▪️one-click access to on-chain predictions
▪️cross-chain funding
▪️extra user rewards driving activity
The thesis: Prediction markets + AI + DeFi rails. This isn’t gambling — it’s financializing information. Bet on the growth of AI-resolved, on-chain reality markets & earning on product releases. A multi-cycle infrastructure bet.
👍6❤5🥰3
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What wins:
👉🏻Agent marketplaces (strategy-as-a-service);
👉🏻MEV-style information arbitrage systems;
👉🏻Protocols building market creation, liquidity routing, risk layers;
👉🏻Data feeds selling aggregated probabilities. Institutions want signal, not speculation — probabilities are valuable data.
Who Loses:
👉🏻Traditional polling & pundit media;
👉🏻Centralized betting platforms;
👉🏻Narrative-driven news without financial accountability.
Asymmetry: Very high
Once markets resolve cleanly at scale, event risk becomes tradable like volatility.
👉🏻Agent marketplaces (strategy-as-a-service);
👉🏻MEV-style information arbitrage systems;
👉🏻Protocols building market creation, liquidity routing, risk layers;
👉🏻Data feeds selling aggregated probabilities. Institutions want signal, not speculation — probabilities are valuable data.
Who Loses:
👉🏻Traditional polling & pundit media;
👉🏻Centralized betting platforms;
👉🏻Narrative-driven news without financial accountability.
Asymmetry: Very high
Once markets resolve cleanly at scale, event risk becomes tradable like volatility.
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💠 STOCHASTIC GAME THEORY AS A MULTI-AGENT PAYOFF SYSTEM. NASH EQUILIBRIUM. BAYESIAN MODELS WITH INCOMPLETE INFORMATION IN DAO GOVERNANCE.
Do you analyze the chart before entering the next position in the market? Candles? Volatility? Liquidity?
We don't just watch candles, we solve equilibrium issues. This is a payoff matrix where someone wins your risk.
It doesn't matter what market we're talking about right now: CEX or DEX. The tools are different, the logic of the mechanics is similar. It's a race of quotes and minimizing the inverse selection on CEX. A game with pool depth, arbitrage, and the behavior of other LPs on DEX.
◾️CEX: optimal spread as a utility-max solution
MMs’re not placing quotes — they’re optimizing:
-> where: λ(q) – order arrival intensity (the higher if the closer to the mid), σ_price – instantaneous volatility, κ(q) – adverse selection risk
Optimal quote q* solves:
That’s the actual Nash equilibrium of the orderbook. When competitors narrow the spread too much, don’t chase top of book and just simply allow them to become a counterparty to their own mistake.
◾️DEX: AMMs = differential games, LPs = short gamma
👉🏻Constant product x*y=k looks simple? No. This is a dynamic LP game game ↔ arbitrageurs ↔ traders
But IL is basically:
And in continuous time:
Meaning LPs are implicitly short gamma while arbitrageurs farm volatility for free. That is, we are literally trading a quadratic risk function, just like in options. Make a sense.
When σ spikes → LPs withdraw → liquidity thins and becomes discrete → σ increases further. A positive feedback loop tailor-made for sophisticated MMs.
Do you analyze the chart before entering the next position in the market? Candles? Volatility? Liquidity?
We don't just watch candles, we solve equilibrium issues. This is a payoff matrix where someone wins your risk.
It doesn't matter what market we're talking about right now: CEX or DEX. The tools are different, the logic of the mechanics is similar. It's a race of quotes and minimizing the inverse selection on CEX. A game with pool depth, arbitrage, and the behavior of other LPs on DEX.
◾️CEX: optimal spread as a utility-max solution
MMs’re not placing quotes — they’re optimizing:
maximize { U(q) = E[spread(q)] * λ(q) – σ_price * κ(q)}-> where: λ(q) – order arrival intensity (the higher if the closer to the mid), σ_price – instantaneous volatility, κ(q) – adverse selection risk
Optimal quote q* solves:
dU/dq = 0
That’s the actual Nash equilibrium of the orderbook. When competitors narrow the spread too much, don’t chase top of book and just simply allow them to become a counterparty to their own mistake.
◾️DEX: AMMs = differential games, LPs = short gamma
👉🏻Constant product x*y=k looks simple? No. This is a dynamic LP game game ↔ arbitrageurs ↔ traders
But IL is basically:
IL ≈ 0.5 * (Δp/p)²
And in continuous time:
IL(t) = 0.5 ∫ σ(t)² dt
Meaning LPs are implicitly short gamma while arbitrageurs farm volatility for free. That is, we are literally trading a quadratic risk function, just like in options. Make a sense.
When σ spikes → LPs withdraw → liquidity thins and becomes discrete → σ increases further. A positive feedback loop tailor-made for sophisticated MMs.
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STOCHASTIC GAME THEORY AS A MULTI-AGENT PAYOFF SYSTEM. NASH EQUILIBRIUM.
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