Blockchain scaling and liquidity concentration on decentralized exchanges

As part of the FiRe seminar, we are pleased to welcome Olga Klein, Associate Professor of Finance at Warwick Business School and Research Fellow at the Gillmore Centre for Financial Technology. Her research explores how digital innovations are transforming financial markets, particularly trading on both traditional as well as decentralized exchanges.

In her talk, she will discuss how the trade-off between security and transaction costs shapes the behavior of traders and liquidity providers on decentralized exchanges. Her findings reveal a market split: larger participants tend to prefer more secure but costly platforms, while smaller traders opt for cheaper alternatives. At the same time, lower transaction costs enable liquidity providers to adjust their positions more frequently, leading to more concentrated liquidity and improved conditions for smaller trades.