Why AMMs Must Evolve or Be Abstracted Into Irrelevance

AMMs are execution primitives, not endpoints. Their core innovation—permissionless liquidity pools—solved bootstrapping but created a fragmented, inefficient market. Users now interact with intent-based solvers like UniswapX and CowSwap, which treat AMMs as just another liquidity source.

The value is shifting from liquidity provision to execution intelligence. Protocols like Across and 1inch Fusion demonstrate that finding the best price across venues is more valuable than owning a single pool. This abstracts the AMM into a commodity.

Evidence: Over 60% of DEX volume on Ethereum now routes through aggregators. The AMM's role is being reduced to a settlement layer for smarter systems.

AMMs are inefficient price finders. They require constant liquidity to facilitate trades, locking capital in static pools while intent-based solvers like those in UniswapX and CowSwap source liquidity dynamically across venues.

The user experience is adversarial. Users battle MEV and slippage with each swap. Intent abstraction inverts this model: users declare a desired outcome, and a competitive network of solvers fulfills it optimally.

Evidence: Over 70% of swap volume on CowSwap is settled via off-chain solvers, demonstrating demand for this model. Protocols like Across use intents to unify bridging and swapping into a single declarative transaction.

Static AMMs are commodities. The core constant product formula is a solved problem, offering zero defensibility. Protocols like Uniswap V3 and Curve have already optimized for capital efficiency, leaving only marginal gains on the table. The next frontier is not the curve itself, but the system managing it.

Intent-based architectures abstract liquidity. Solvers for UniswapX and CowSwap treat on-chain pools as just another liquidity source, not a destination. This commoditizes the AMM, reducing LPs to passive yield farmers while solvers capture the value of order flow and cross-domain execution.

Survival requires dynamic parameterization. AMMs must evolve into reactive systems. This means curves that auto-adjust fees and curvature based on volatility, akin to dynamic automated market makers (dAMMs), or integrate proactive LP protection like MEV-aware vaults. The goal is to make the pool the optimal venue, not just a fallback.

Evidence: The rise of solver dominance. Over 70% of CowSwap's volume is settled via on-chain AMMs, but the economic surplus accrues to solvers, not LPs. This demonstrates the abstraction layer's power and the urgent need for AMMs to capture more value from their own liquidity.

AMMs are commoditized infrastructure. The core innovation—constant product formulas, permissionless pools—is now a solved problem. The differentiated value has shifted from the liquidity source to the execution layer that can best route and settle user intents.

Intent-based architectures abstract AMMs. Protocols like UniswapX and CowSwap treat the AMM as a dumb liquidity pipe. Their solvers compete to find the best execution path across AMMs, RFQ systems, and private liquidity, rendering the specific AMM irrelevant to the user.

Liquidity follows volume, not protocol. The flywheel of intent attracts users with better prices and UX, which attracts more solvers and private liquidity, which further improves execution. This creates a winner-take-most market for the aggregation layer, not the underlying AMM.

Evidence: UniswapX now routes over 30% of Uniswap's volume, often settling trades off-chain or on alternative AMMs. This proves the value accrual is shifting from the AMM's LP fees to the solver network and the protocol capturing the user's intent.