Replicating Market Makers
Payoff-specific CFMMs and the research lineage behind ARRANGE.
#From payoff to market maker
A Replicating Market Maker constructs a Constant Function Market Maker whose liquidity-provider value matches or approximates a target payoff under stated assumptions.
The design begins with the payoff and solves backward for a feasible reserve set or trading function.
#Research foundation
Angeris, Evans and Chitra establish an equivalence between a class of concave, nonnegative, nondecreasing, one-homogeneous payoff functions and convex CFMMs. Primitive's RMM-01 work applies related ideas to Black-Scholes covered-call replication.
- Replicating Market Makers
Angeris, Evans and Chitra's primary paper on constructing CFMM trading functions from target payoff functions.
- Replicating Portfolios: Constructing Permissionless Derivatives
Primitive research describing RMM-01 and onchain structured-product constructions.