Procrypt
30.4K posts

Procrypt
@Procrypt
Long time crypto advocate. Architect of degeneracy @bonkbot_io





Beyond what's already been discussed around the design of @papertrade_xyz , what I was thinking/concerned is the impact of toxic flow/insider trades on the LPs. While it's different, it reminded me of the existing dynamic between AMM LPs and MM/MEV searchers. When you know there are LPs that are always willing to make your trades at whatever mid-price that the market tells them so, takers with information advantage can almost always take profit out of passive LPs. And if you look at some of the bluechip AMM pools, the flow can be over 50% toxic at times of market volatility, which is also when LP on AMM face the most adverse selection and suffer the most loss. In that sense, pair that can be sustainably traded on papertrade will be constrained to assets that have the least possibility of asymmetrical advantage and insider trade to any takers; in other words, asset that exhibit true martingale. But given that papertrade takes the mid-price from HyperCore (still not the most liquid venue for bluechip price discovery), it's very possible for sophisticated players to continuously exploit the LPs via the miliseconds of latency that may exist on Hyperliquid. Either way, always great to see new DeFi initiatives ;))

















