Spherical Cow Labs

Theoretical problems. Practical solutions. Inspired by spherical cows and serious absurdity.

[Spherical Cow Labs @SCL_xyz]

The next step is to look at intraday data, uncertainty more carefully, concentrated-liquidity ranges, and many more RWA pairs.

Full article:
https://t.co/z108ndZMqW

[Spherical Cow Labs @SCL_xyz]

A confined price does not have to be still.

It can wiggle around continually while something outside the AMM makes large final separations less likely. A peg, redemption, index trades, or capital moving between similar assets can provide such a pull.

[Spherical Cow Labs @SCL_xyz]

This is only a preliminary framework, not a finished classification.

It also does not answer the separate question of whether people will actually choose these pools instead of order books or RFQs.

[Spherical Cow Labs @SCL_xyz]

This suggests a fairly simple ratio:

r(T) = mean endpoint IL / mean pathwise LVR

It asks how much path movement remains as loss at the end of time horizon T. Near one looks like free diffusion. Low and falling r(T) means that more of the movement has reversed before the end.

[Spherical Cow Labs @SCL_xyz]

Hayden Adams recently asked whether LPing is really the same for every pair.

In practice it does not feel that way. BTC/USD can be difficult, while stablecoin pools are usually much calmer as long as the peg holds. Can we quanitfy this?

https://t.co/4kTXHQ2uCL

[Hayden Adams 🦄 @haydenzadams]

My first blog post since 2019! https://t.co/XTpGSkEUSg

[Spherical Cow Labs @SCL_xyz]

Suppose the relative price is free to wander.

IL only sees where it finishes. LVR adds the small losses created as the pool follows the path. Surprisingly, their averages are the same.

[Spherical Cow Labs @SCL_xyz]

It helps to separate two questions.

Would you be happy holding both assets?

And if so, how far can their prices move apart?

You can like both assets while still preferring a pair whose relative price stays in a fairly narrow region.

[Spherical Cow Labs @SCL_xyz]

@haydenzadams Interesting take on 'correlated pairs' opening larger markets for AMMs. We formulate a practical guide: attractive pairs move enough to generate fees, but little of that survives as endpoint loss for LPs. Tested on four pairs and backed by a theory: https://t.co/z108ndZeBo

[Spherical Cow Labs @SCL_xyz]

@therollupco For a technical walkthrough with interactive elements check here https://t.co/BuMe7lZcA5

[Spherical Cow Labs @SCL_xyz]

Full article (math, figures, simulations):

👉 https://t.co/zni0jTT2R5

If you build AMMs, LP strategies, or fee models - this framework is table stakes.

[Spherical Cow Labs @SCL_xyz]

Liquidity provision in AMMs is often framed as passive yield.
Deposit assets → earn fees → done.

That framing is wrong.

An LP position is a risk-bearing portfolio, not a savings account. 🧵👇

[Spherical Cow Labs @SCL_xyz]

AMMs aren’t broken.

They’re misunderstood portfolios.

Using the Greeks makes LP economics analyzable, comparable, and designable.