Doc's Daily Commentary

Mind Of Mav

Omnia Opp: DeFi’s “Cambrian Explosion” Moment


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Uniswap v2 volume. Credit:

Uniswap by example

Let’s say we fund a Uniswap pool with 50 apples (a) and 50 bananas (b), so anyone is free to pay apples for bananas or bananas for apples. Let’s assume the exchange rate between apples and bananas is exactly 1:1 on their primary market. Because the Uniswap pool holds 50 of each fruit, the constant product rule gives us a * b = 2500—for any trade, Uniswap must maintain the invariant that our inventory of fruit, multiplied together, equals 2500.


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You can interpret the slope at each point as the marginal exchange rate.
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Uniswap sweeping back and forth through its pricing curve after a series of trades.

Impermanent Loss in a Nutshell

This should give you a sense of how Uniswap pricing works. But this still begs the question — is Uniswap good at what it does? Does this thing actually generate profits? After all, any market maker can quote prices, but it’s another thing to make money.

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The Cambrian AMM Explosion

Since Uniswap’s rise, there has been an explosion of innovation in AMMs. A legion of Uniswap descendants have emerged, each with its own specialized features.

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Uniswap, Balancer, and Curve trading volume. Source: Dune Analytics
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The Stableswap curve (blue), used in Curve. Source: Curve whitepaper

The Correlation Spectrum

Let’s stick to Uniswap since it’s the simplest CFMM to analyze.

Let’s say you want to be a Uniswap LP (liquidity provider) in the ETH/DAI pool. By funding this pool, there are two simultaneous things you have to believe for being an LP to be better than just holding onto your original funds:

1-The ratio in value between ETH and DAI will not change too much (if it does, that will manifest as an impermanent loss)

2-Lots of fees will be paid in this pool


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Uniswap returns for ETH/DAI pool (vs holding 50/50 ETH/DAI). Source: ZumZoom Analytics

Market making in a nutshell

Market makers are in the business of providing liquidity to a market. There are three primary ways market makers make money: designated market making arrangements (traditionally paid by asset issuers), fee rebates (traditionally paid by an exchange), and by pocketing a spread when they’re making a market (what Uniswap does).

Why are CFMMs winning?

Let’s take stablecoins.

CFMMs are clearly going to win this vertical.

From Order Books to AMMs

I believe there are four reasons why Uniswap beat out order book exchanges.

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The original Yahoo homepage and the original Google homepage


The ReadySetCrypto "Three Token Pillars" Community Portfolio (V3)


Add your vote to the V3 Portfolio (Phase 3) by clicking here.

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View V3 Portfolio (Phase 1) by clicking here.

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What is the goal of this portfolio?

The “Three Token Pillars” portfolio is democratically proportioned between the Three Pillars of the Token Economy & Interchain:

CryptoCurreny – Security Tokens (STO) – Decentralized Finance (DeFi)

With this portfolio, we will identify and take advantage of the opportunities within the Three
Pillars of ReadySetCrypto. We aim to Capitalise on the collective knowledge and experience of the RSC
community & build model portfolios containing the premier companies and projects
in the industry and manage risk allocation suitable for as many people as

The Second Phase of the RSC Community Portfolio V3 was to give us a general idea of the weightings people desire in each of the three pillars and also member’s risk tolerance. The Third Phase of the RSC Community Portfolio V3 has us closing in on a finalized portfolio allocation before we consolidated onto the highest quality projects.

Our Current Allocation As Of Phase Three:

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The ReadySetCrypto "Top Ten Crypto" Community Portfolio (V4)


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What is the goal of this portfolio? 

The “Top Ten Crypto” portfolio is a democratically proportioned portfolio balanced based on votes from members of the RSC community as to what they believe are the top 10 projects by potential.
This portfolio should be much more useful given the ever-changing market dynamics. In short, you rank the projects you believe deserve a spot in the top 10. It should represent a portfolio and rank that you believe will stand the test of time. Once we have a good cross-section, we can study and make an assessment as to where we see value and perhaps where some diamonds in the rough opportunities exist. In a perfect world, we will end up with a Pareto-style distribution that describes the largest value capture in the market.
To give an update on the position, each one listed in low to high relative risk:
SoV/money == BTC, DCR
Platforms == ETH, XTZ
Private Money == XMR / ZEC / ZEN
DeFi == MKR / SNX and stablecoins
It is the most realistic way for us to distill the entirety of what we have learned (and that includes the RSC community opinion). We have an array of articles that have gradually picked off one by one different projects, some of which end up being many thousands of words to come to this conclusion. It is not capitulation because we all remain in the market. It is simply a consolidation of quality. We seek the cream of the crop as the milk turns sour on aggregate.

Current Top 10 Rankings:



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