From 2bade573d08c1d5015b17a1975edfbd322674d33 Mon Sep 17 00:00:00 2001
From: m3taversal <m3taversal@gmail.com>
Date: Sun, 15 Mar 2026 14:36:57 +0000
Subject: [PATCH] add
 entities/internet-finance/metadao-develop-amm-program-for-futarchy.md

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+---
+type: entity
+entity_type: decision_market
+name: "MetaDAO: Develop AMM Program for Futarchy?"
+domain: internet-finance
+status: passed
+parent_entity: "[[metadao]]"
+platform: "futardio"
+proposer: "joebuild"
+proposal_url: "https://www.futard.io/proposal/CF9QUBS251FnNGZHLJ4WbB2CVRi5BtqJbCqMi47NX1PG"
+proposal_date: 2024-01-24
+resolution_date: 2024-01-29
+category: "mechanism"
+summary: "Proposal to replace CLOB-based futarchy markets with AMM implementation to improve liquidity and reduce state rent costs"
+tracked_by: rio
+created: 2026-03-11
+---
+
+# MetaDAO: Develop AMM Program for Futarchy?
+
+## Summary
+Proposal to develop an Automated Market Maker (AMM) program to replace the existing Central Limit Order Book (CLOB) implementation in MetaDAO's futarchy system. The AMM would use liquidity-weighted price over time as the settlement metric, charge 3-5% swap fees to discourage manipulation and incentivize LPs, and reduce state rent costs from 135-225 SOL annually to near-zero.
+
+## Market Data
+- **Outcome:** Passed
+- **Proposer:** joebuild
+- **Created:** 2024-01-24
+- **Completed:** 2024-01-29
+- **Budget:** 400 META on passing, 800 META on completed migration
+- **Timeline:** 3 weeks development + 1 week review
+
+## Technical Scope
+**Program changes:**
+- Write basic AMM tracking liquidity-weighted average price over lifetime
+- Incorporate AMM into autocrat + conditional vault
+- Feature to permissionlessly pause AMM swaps and return positions after verdict
+- Feature to permissionlessly close AMMs and return state rent SOL
+- Loosen time restrictions on proposal creation (currently 50 slots)
+- Auto-revert to fail if proposal instructions don't execute after X days
+
+**Frontend integration:**
+- Majority of work by 0xNalloK
+- Mainnet testing on temporary subdomain before migration
+
+## Significance
+This represents a fundamental mechanism upgrade for MetaDAO's futarchy implementation, addressing three core problems with the CLOB approach:
+
+1. **Liquidity:** Wide bid/ask spreads and price uncertainty discouraged limit orders near midpoint
+2. **Manipulation resistance:** CLOBs allowed 1 META to move midpoint; VWAP vulnerable to wash trading
+3. **Economic sustainability:** 3.75 SOL state rent per market pair (135-225 SOL annually) vs near-zero for AMMs
+
+The proposal explicitly prioritizes simplicity and cost reduction over theoretical purity, noting that "switching to AMMs is not a perfect solution, but I do believe it is a major improvement over the current low-liquidity and somewhat noisy system."
+
+The liquidity-weighted pricing mechanism is novel in futarchy implementations—it weights price observations by available liquidity rather than using simple time-weighted averages, making manipulation expensive when liquidity is high.
+
+## Relationship to KB
+- metadao.md — core mechanism upgrade
+- [[MetaDAOs Autocrat program implements futarchy through conditional token markets where proposals create parallel pass and fail universes settled by time-weighted average price over a three-day window]] — mechanism evolution from TWAP to liquidity-weighted pricing
+- [[futarchy adoption faces friction from token price psychology proposal complexity and liquidity requirements]] — addresses liquidity barrier
+- [[futarchy is manipulation-resistant because attack attempts create profitable opportunities for defenders]] — implements explicit fee-based defender incentives
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