The major problem that any AMM face right now is decline in incentives that liquidity provider gets for providing liquidity, the usual way that is been started and been carried out so far is ideal only for a neutral market, to compensate LP positions on a trading market for impermanent loss, most AMMs started giving out their own tokens. This is not an ideal solution as the TVL grows because of the incentive and then drains out as the token starts falling in price or the APY decreases over time.
This problem is only because the liquidity positions are solely made for the natural market and no flexibility to change it as the market moves.
Last modified 1yr ago