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Four papers had been written but never committed, and INDEX.md already listed
some of them — so the index pointed at files that did not exist in the repo.
Adds:
- sovereign-exchange/ (tex + pdf)
- lux-growth-round/ (tex + pdf)
- lp-310-universal-liquidity/sections/ — five section .tex files that the
paper \input{}s, so the top-level tex could not build without them
- built PDFs for fee-settlement, lp-208-dag-mempool, lp-310, lux-aivm
PDFs are tracked here by convention: 172 were already committed alongside 1,648
.tex sources, and the ignore rules only exclude the separate pdfs/ directory.
Each of the four has its matching .tex in the same directory — verified, not
assumed.
LaTeX build artifacts (.aux .log .out .toc .fdb_latexmk) stay ignored; nothing
outside .tex/.pdf/INDEX.md is staged. No .md anywhere in the new papers —
papers are LaTeX.
86 lines
4.5 KiB
TeX
86 lines
4.5 KiB
TeX
\section{Liquidity Provision}
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\label{sec:provision}
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A router is only as good as the depth behind it. This section specifies how
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each source is \emph{supplied}, and --- the operative question for a
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white-label operator standing up a new venue --- how a venue reaches
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competitive depth on day one rather than after months of organic bootstrap.
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\subsection{Native AMM: passive, permissionless depth}
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The constant-function AMM is supplied by liquidity providers who deposit a
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reserve pair. V2 spreads capital uniformly along the price curve; V3
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concentrates it in a chosen range, so the same capital quotes tighter
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around the active price at the cost of going idle outside the range
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(\cite{uniswapv3}). Provision is permissionless and non-custodial: an LP's
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capital sits in the pool contract, priced by the invariant, and is
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withdrawable at will. This is the always-available floor of the waterfall
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(\textbf{W1}) --- it never reneges and never goes offline, but its price is
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mechanical and its depth is whatever LPs have committed.
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\subsection{D-Chain order book: active, professional depth}
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The D-Chain limit-order book is supplied by makers posting resting orders
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into the matching engine. Unlike the AMM, book depth reflects makers'
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\emph{views}, not a fixed curve, and can be far tighter around the mid. The
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engine matches deterministically at hardware speed --- a mean of $169$\,ns
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per match, with millions of orders per second of throughput and bit-exact
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CPU/GPU parity --- so a professional maker can quote, cancel, and re-quote
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at a cadence competitive with a centralized venue, while fills still settle
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on-chain through \texttt{0x9999}. Determinism is what makes the book
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auditable: the match sequence is reproducible, a requirement a regulated
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venue cannot waive.
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\subsection{Signed-quote PMM: global depth without on-chain inventory}
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\label{sec:provision-pmm}
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The private market maker supplies the deepest and most price-competitive
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leg without pre-committing capital to a pool. It prices a pair against
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external reference venues, commits a firm on-chain quote for a short
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window, fills against the trader, and hedges off-chain to restock
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(\S\ref{sec:rfq}). Because its inventory lives off-chain, the PMM can quote
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size far beyond any on-chain reserve, and because it prices against global
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markets, its quotes track the global mid. The cost is the structural one
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made precise in \S\ref{sec:rfq}: the maker, not the user, signs the price;
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a short on-chain expiry removes the last-look free option; and the spread
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is priced for hedge latency, not for the instantaneous mid.
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\subsection{Bootstrapping a new venue}
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\label{sec:provision-bootstrap}
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The three mechanisms compose into a concrete answer to the cold-start
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problem that kills most new venues: an empty book quotes nothing, and no
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trader arrives before there is depth, and no maker posts depth before there
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are traders. A venue built on Universal Liquidity breaks the loop from the
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first block:
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\begin{enumerate}[label=\textbf{B\arabic*.}]
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\item \textbf{Plug in a PMM on day one.} The operator (or a partnered
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market maker) points a signed-quote PMM at the pairs it wants live. The
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venue immediately quotes global-market pricing at professional size,
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\emph{before} any passive LP or resting order exists --- the PMM's
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off-chain inventory is the initial depth.
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\item \textbf{Seed native pools in parallel.} Passive V3 liquidity is
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added around the active price to provide the trustless floor and to
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capture flow the PMM does not want.
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\item \textbf{Borrow sibling depth.} The cross-L1 aggregation of
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\S\ref{sec:router-global} lets the new venue quote against liquidity
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already resident on other Lux L1s, so it is not starting from zero even
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for its native legs.
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\item \textbf{Let the book fill in.} As flow arrives, professional makers
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post resting D-Chain orders, and organic V3 provision deepens. The venue
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transitions from PMM-anchored to book-anchored depth without any
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discontinuity in the trader's experience.
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\end{enumerate}
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\begin{remark}
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For an operator reselling a regulated venue, this is the decisive property.
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The hardest part of launching an exchange is not the software --- it is
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having a price and size to show on the first trade. Universal Liquidity
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makes day-one depth a \emph{configuration} (point a PMM at the pairs, seed
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some V3, enable sibling aggregation) rather than a multi-quarter
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liquidity-mining campaign. The same mechanism serves crypto pairs and
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tokenized-securities pairs identically, so a single venue lists both with
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competitive depth from launch.
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\end{remark}
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