The future demands a hyper-financialized world where decentralized markets trade a plethora of crypto tokens. These tokens represent everything from fractionalized art and real-state rights, to a myriad of fully digital assets, from in-game virtual currencies to shares in the profits of an actually decentralized, actually autonomous, organization. The only way we are getting there is if markets can be spun up as easily as we create the tokens themselves. If we have to engage with some trading firm every time we want to make a market for fractionalized royalties of some new VR experience, then that market will probably never exist.

AMMs could be worse than centralized limit order books markets in any capacity you wanted to measure, and they would still win because they enable the instant, frictionless creation of markets by anyone just holding some amount of assets.

No sophisticated HFT systems need to be spun up. No special SLAs have to be drafted and signed. Instead, AMMs offer fair, algorithmically determined prices that directly respond to market demand.

Some folks will try to tell you that RFQ systems have a place in this future, and maybe they do, but today most of the quotes on RFQs are arbitraging prices between centralized exchanges (CEXes) and the slippage limit of your on-chain order. They are, in large part, an intermediary between an on-chain swapper and liquidity or expected volume at some centralized exchange. I’m not trying to be critical; they provide a valuable service to traders when they can provide a better price than what is otherwise available on-chain. However, a centrally operated trading system will not get us to the future we are heading for.

If we compare today the liquidity sources where most of the trades happening over the 0x protocol end up, we can see that AMMs account for around 70% of the volume versus 30% for RFQs. If you account for the fact that RFQ systems existed on-chain well before Uniswap v1, you can understand where the trend is going.

And all of this is just getting started. A vast majority of today's crypto assets remain outside the decentralized finance ecosystem, often stored on centralized exchanges or, at best, in cold wallets, not leveraging the potential of permissionless innovation in non-custodial financial services. What do you think AMMs look like when there is 1T in assets in DeFi protocols? What about 10T? You are not sufficiently excited about AMMs.

The future demands a hyper-financialized world where decentralized markets trade a plethora of crypto tokens. These tokens represent everything from fractionalized art and real-state rights, to a myriad of fully digital assets, from in-game virtual currencies to shares in the profits of an actually decentralized, actually autonomous, organization. The only way we are getting there is if markets can be spun up as easily as we create the tokens themselves. If we have to engage with some trading firm every time we want to make a market for fractionalized royalties of some new VR experience, then that market will probably never exist.

AMMs could be worse than centralized limit order books markets in any capacity you wanted to measure, and they would still win because they enable the instant, frictionless creation of markets by anyone just holding some amount of assets.

No sophisticated HFT systems need to be spun up. No special SLAs have to be drafted and signed. Instead, AMMs offer fair, algorithmically determined prices that directly respond to market demand.

Some folks will try to tell you that RFQ systems have a place in this future, and maybe they do, but today most of the quotes on RFQs are arbitraging prices between centralized exchanges (CEXes) and the slippage limit of your on-chain order. They are, in large part, an intermediary between an on-chain swapper and liquidity or expected volume at some centralized exchange. I’m not trying to be critical; they provide a valuable service to traders when they can provide a better price than what is otherwise available on-chain. However, a centrally operated trading system will not get us to the future we are heading for.

If we compare today the liquidity sources where most of the trades happening over the 0x protocol end up, we can see that AMMs account for around 70% of the volume versus 30% for RFQs. If you account for the fact that RFQ systems existed on-chain well before Uniswap v1, you can understand where the trend is going.

And all of this is just getting started. A vast majority of today's crypto assets remain outside the decentralized finance ecosystem, often stored on centralized exchanges or, at best, in cold wallets, not leveraging the potential of permissionless innovation in non-custodial financial services. What do you think AMMs look like when there is 1T in assets in DeFi protocols? What about 10T? You are not sufficiently excited about AMMs.