Supra Mission 35 Answers

Question 1: Why did the concept of Automated Market Makers (AMMs) emerge in the world of Web3?

• To eliminate the need for a centralized matching agent
• To rely on centralized market makers
• To centralize trading operations
• To increase slippage in DeFi trades

In regular trading, there are middlemen who help buyers and sellers agree on fair prices. However, in the decentralized world of Web3, people wanted to trade without having to trust a central authority. 

So, AMMs use smart contracts and algorithms to let people trade directly with each other on a decentralized exchange like Uniswap or Balancer. This way, there’s no need for a middleman, making the trading process trustless and fully decentralized.

Question 2: What inherent drawbacks and risks does the AMM model still face in DeFi?

• Perfect liquidity provision
• Impermanent gains and decentralized operations
• Low slippage and ideal risk mitigation
• High slippage, impermanent loss, and less than ideal risk mitigation

Sometimes it’s hard for AMMs to handle the big price changes that occur with highly volatile tokens (high slippage). 
And people who provide funds might not always make as much money as they hope. They may even end up losing money if the prices of the assets they provide change drastically (impermanent loss). 
Also, the way AMMs protect against risks could be better.

Question 3: What does DFMM stand for, according to the mission?

• Decentralized Fashion Market Model
• Decentralized Football Metaverse Module
• Dynamic Function Market Maker
• Digitally Functioning Marketing Mechanism

If you haven't joined supra oracles yet, you can join here.