Not All LPs Are Equal: The Active-Passive Gap in Automated Market Maker Liquidity Provision

Battle Count: 0

Highly relevant for DeFi quantitative trading, specifically for optimizing liquidity provision strategies, understanding adverse selection in AMMs, and evaluating the true profitability of passive vs. active capital deployment.

Requires processing large volumes of on-chain event logs (Mint, Burn, Swap) and matching them using LIFO/FIFO logic. The infinitesimal method is simpler (price path only), but the LIFO method requires stateful matching and precise timestamp/ordering handling.

The methodology is well-defined with specific parameters (e.g., 20s matching horizon, 15s markout horizon). Data sources (Allium, Binance) are identified, though raw data access may require commercial licenses. Robustness checks are extensive.