Welcome! I am currently a Lecturer at the University of Western Australia.
I received a PhD in Finance from Warwick Business School (Aug. 2025).
My research topics are DeFi, economic networks and market microstructure.
Email: seczhou@outlook.com or zhengge.zhou@uwa.edu.au
This paper argues that an automated market-making algorithm in the context of blockchain-based financial exchange can act as a Walrasian auctioneer. The resulting pricing schedule will form as a (liquidity-) weighted average over the demand schedules submitted by liquidity providers. This optimal schedule is implementable when liquidity providers govern the exchange in a decentralised manner.
Unlike traditional exchanges, where the creation of trading venues is institutionally constrained, decentralised exchange markets allow liquidity providers to establish competing pools with minimal technological barriers. By studying the interaction among gas fees, entry incentives, and MEV-related risk, this paper answers when a fragmented decentralised exchange market structure can be sustained in equilibrium.
Is a medium of exchange still needed in a blockchain economy, much as money is needed in modern economic systems? We show that it is. The use of a medium-of-exchange can significantly reduce the operational costs of a blockchain-based economy.
Does competition between market makers lead to the adoption of competitive AI-powered pricing algorithms? We endogenize this adoption decision by dealers and answer the above question: Not necessarily.
A Model of Interdealer Network
Dealers are interconnected through a network of trading relationships. While a point-to-point complete interdealer network is optimal for inventory risk-sharing, it may instablize the market.