Abstract illustration of bundled trades in a cryptocurrency exchange.

Automated Market Makers: Are Bundled Deals the Future of Crypto Trading?

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Kai Mendoza in Tech & Innovation December 2025 • 5 min read.

"Dive into the economics of differentiable pricing and discover how bundled trades could unlock new profit potential in DeFi."


In the fast-paced world of decentralized finance (DeFi), automated market makers (AMMs) play a vital role, enabling users to trade cryptocurrencies without intermediaries. Think of them as the engines that power decentralized exchanges (DEXs), setting prices and matching buyers and sellers. Traditionally, AMMs have focused on simple buy-and-sell orders for individual assets. However, a fascinating question has emerged: what if AMMs could offer more complex trades, like bundled deals or personalized pricing?

Imagine being able to buy one cryptocurrency while simultaneously selling another, all at a single, optimized price. Or picture an AMM that tailors its pricing based on your trading history or the specific combination of assets you're interested in. This concept goes beyond the basic bid-ask spread and opens up a world of possibilities for both traders and liquidity providers.

Recent research delves into this very idea, exploring the potential of "differentiable economics" to design more sophisticated AMMs. These next-generation AMMs could potentially consider multiple assets at once, offer bundled discounts, and even accept payments "in kind" (trading one asset for another). But are these complex mechanisms truly beneficial, or do they add unnecessary layers of complication to the already intricate world of DeFi?

The Rise of Bundled Trading: How AMMs Could Get a Whole Lot Smarter

Abstract illustration of bundled trades in a cryptocurrency exchange.

Traditional market makers profit by charging a spread, buying low and selling high. However, innovative AMMs are starting to explore a much broader range of possibilities, inspired by mechanisms used in prediction markets and decentralized finance (DeFi). For example, both logarithmic market scoring rules (LMSR) and constant-product market makers provide traders with a continuous spectrum of trades at a variety of prices. This is similar to posted price mechanisms, but what if a market maker wants to trade in multiple goods at once? In this case, the space of mechanisms could get extremely rich.

This raises a crucial question: should a market maker offer goods separately at one price, or provide bundle discounts or payments? For example, consider separate prices for good 1 at x, and good 2 at y, but a simultaneous deal to buy good 1 and sell good 2 costs z < y - x. While most market makers stick to setting spreads per good, there are a few exceptions where bundling occurs with certain order types on exchanges or in combinatorial prediction markets. There may be complements or substitutes between goods, or practical reasons why a customer is forced to trade bundles, it leads us to believe that a profit-maximizing market maker will take advantage of more complex strategies. But are these advantages real? Research indicates that, with additive and quasilinear traders, mixed bundling is possible.

  • Mixed Bundling: Trading goods separately at one price while offering discounts on bundles.
  • Payments in Kind: Accepting sales of one good to discount the purchase of another.
  • Continuous Allocations: Offering a continuum of allocations in certain regions.
To determine the use of these techniques, researchers are using "differentiable economics", employing machine learning to explore all mechanisms to optimize performance. From this exploration, they have found conjectured optimal mechanisms which offer bundling behavior across both buying and selling. They also potentially offer a continuum of possible trades. Based on this, many believe that the full space of mechanisms is potentially useful to the market maker.

The Future of AMMs: Efficiency vs. Complexity

The research suggests that, in certain scenarios, bundling and accepting "in-kind" payments can significantly boost a market maker's profits. However, it also highlights the increased complexity of these mechanisms. While the potential for greater efficiency exists, AMMs must carefully balance this with the need for user-friendliness and transparency. As the DeFi landscape evolves, it will be fascinating to see whether these advanced strategies become more prevalent, shaping the future of automated trading.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: https://doi.org/10.48550/arXiv.2402.09129,

Title: Optimal Automated Market Makers: Differentiable Economics And Strong Duality

Subject: cs.gt cs.ai econ.th q-fin.tr

Authors: Michael J. Curry, Zhou Fan, David C. Parkes

Published: 14-02-2024

Everything You Need To Know

1

What is the primary function of Automated Market Makers (AMMs) in the context of decentralized finance (DeFi)?

Automated Market Makers (AMMs) are the backbone of decentralized exchanges (DEXs). They facilitate cryptocurrency trading without the need for intermediaries by setting prices and matching buyers and sellers. Essentially, AMMs act as the engines that power DEXs, allowing users to trade various cryptocurrencies seamlessly.

2

How do traditional Automated Market Makers (AMMs) differ from the potential of more advanced AMMs, such as those using differentiable economics?

Traditional AMMs typically focus on simple buy-and-sell orders for individual assets, operating on a basic bid-ask spread. Advanced AMMs, however, explore more complex strategies inspired by prediction markets and decentralized finance (DeFi). These next-generation AMMs, which may leverage 'differentiable economics', can potentially offer bundled trades, personalized pricing, consider multiple assets at once, offer bundled discounts, and even accept payments 'in kind'.

3

What are the potential benefits of mixed bundling and payments in kind for Automated Market Makers (AMMs), and how do they work?

Research suggests that mixed bundling and payments in kind can significantly boost a market maker's profits. Mixed bundling involves trading goods separately at one price while offering discounts on bundles. Payments in kind mean accepting sales of one good to discount the purchase of another. For example, an AMM could offer separate prices for good 1 at x and good 2 at y, but a simultaneous deal to buy good 1 and sell good 2 might cost z < y - x. These strategies allow AMMs to cater to different trader needs and potentially extract more value from trades.

4

What is 'differentiable economics,' and how is it used in the development of advanced Automated Market Makers (AMMs)?

'Differentiable economics' is a research approach using machine learning to explore various mechanisms to optimize the performance of AMMs. This method helps researchers identify and analyze optimal mechanisms, such as mixed bundling, payments in kind, and continuous allocations, to improve AMM efficiency and profitability. The exploration of differentiable economics can lead to AMMs that offer a continuum of possible trades and bundling behavior.

5

What are the key considerations for the future of Automated Market Makers (AMMs), particularly in balancing efficiency and complexity?

As the DeFi landscape evolves, AMMs must balance the potential for increased efficiency with the need for user-friendliness and transparency. While advanced strategies like bundling and payments in kind can boost profits, they also increase complexity. The challenge lies in designing AMMs that are both powerful and easy to use, ensuring that the benefits of these advanced mechanisms are accessible to a wide range of traders without overwhelming them with complexity.

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