Coincidence of Wants

Coincidence of Wants is a foundational economic concept describing a situation where two parties each hold an item the other desires, allowing for a direct exchange. In decentralized finance, automated market makers facilitate this indirectly by acting as a counterparty for all traders.

However, some advanced protocols attempt to find direct matches between users to bypass the need for an intermediary and avoid the fees and MEV associated with traditional pools. By identifying when traders have complementary needs, these protocols can execute peer-to-peer swaps directly within the batch.

This reduces the reliance on external liquidity providers and minimizes the impact of market microstructure on the final price. It effectively optimizes the trade flow by leveraging the underlying network participants' needs rather than relying solely on automated liquidity.