Now that we know what we want the system to do, the next question we must ask is how do we know if the system is actually doing what we want it to do

About Metrics

There is no one right metric or right process for determining metrics.

It’s helpful to have the ability to translate between words and mathematical formulas

Metrics for AMMs

Example metrics for an AMM, non-exhaustive

• Capital efficiency: measure how effective a given quantity of assets is with respect to the achievement of desirable performance metrics of an AMM
• Return on Investment: amount of gains made by traders, usually measured monthly or yearly
• Impermanent Loss: A measure of the difference between providing the liquidity to a pool vs. simply holding the two assets in a wallet
• Slippage: the difference between the quoted price an the actual price as determined by a trade
• Trading Volume: total value of all trades made during a given period

Metrics can also be used for external purposes such as evaluating the market and competitors. We can look at token prices and slippage on other exchange's. It’s useful to look into other spaces where asset holders can provide liquidity and gain returns to see how they differ from our system.