Introducing Concentrated CoW AMM: Maximizing Capital Efficiency and Returns for Liquidity Providers

Hi @yevhenx

That is a great idea! As I discuss here, I believe the point of a CoW AMM is to be an automated index fund that also earns yields (from trading fees). The concentration factor then becomes a parameter determining how far the LP is willing to deviate from the prescribed allocation (if you want, the AMMs tolerance to the tracking error) so to earn yield. In other words: a 50/50 concentrated COW AMM always trades more than a 50/50 uncocntranted CoW AMM, hence it moves around but does not track exactly the 50/50 rebalancing strategy. On the other hand, because it trades more, it also earns more fees.

By the way, as you probably know, we are currently focused on developing COW AMMs on top of Balancer’s infrastructure. Is there any chance that you can adapt your work to that context? (Note that Balancer will soon launch its v3, and then the goal is to build COW AMMs on top of that infrastructure.)