About this episode
This episode discusses a phenomenon known as Just-In-Time Liquidity at Decentralized Exchanges. Agostino Capponi (Columbia University) explains that, while this phenomenon is generally viewed as positive for liquidity demanders, it can actually undermine liquidity provision. More specifically, JIT liquidity providers can pick-and-choose the best trades, which reduces the incentive for passive liquidity providers to offer liquidity. The consequent reduction in passive liquidity can lead to lower overall liquidity.
Paper: The Paradox Of Just-In-Time Liquidity In Decentralized Exchanges: More Can Sometimes Mean Less
Guests
Agostino Capponi
Associate professor in the IEOR Department at Columbia University.
Andreas Park
Professor of Finance, University of Toronto.
Fahad Saleh
Associate Professor of Finance and the Nunnenkamp-Cinelli Faculty Fellow at Wake Forest University.
About our guest
Agostino Capponi is a Professor in the Department of Industrial Engineering and Operations Research at Columbia University, where he is also a member of the Data Science Institute and the founding director of the Columbia Center for Digital Finance and Technology. His current research interests are in blockchain technologies, market microstructure, and networks. Agostino's research has been recognized with the 2018 NSF CAREER award, and with a JP Morgan AI Research Faculty award. His research has also been covered by various media outlets, including Bloomberg, the Financial Times, Vox, and the Oxford Business Law. Agostino serves as an editor of Management Science in the Finance Department, co-editor of Mathematics and Financial Economics, area editor of Operations Research Letters, and serves as an associate editor of major journals in his field. Agostino is the former Chair of the SIAG/FME Activity Group and of the INFORMS Finance Section, and a member of the Council of the Bachelier Finance Society.
