Super interesting technical discussions on both sides of the AMM debate tonight( @SBF_Alameda and @KyleSamani vs @danrobinson). There are also plenty of practical reasons for Uniswap's strong PMF, though. Here's the bottom line for me, as an active Uniswap LP:

For starters, where am I going to get my own personal on-chain algo trading firm with a single transaction? I don't have time or resources to build a bespoke AMM strategy. https://twitter.com/SBF_Alameda/status/1316509315885264896

I also just don't really care about any of the inefficiencies. I have no other options, and I'm pretty confident that I'm going to make money off the trading fees blindly fading some of these pairs both ways.

I felt this way even before UNI rewards came along (and this has been empirically true for many top pairs, in particular ETH/DAI). I LP because I have strong conviction that I'm going to make money. UNI rewards just sweeten the pot.

It's also comforting knowing that the Uniswap AMM acts as a Schelling point for all LPs. We're all in the same strategy, we all jointly don't care that we're inefficient. So for me the question is, if we are still making money, and retail is getting better quotes...

...(due to LP inefficiency),then who is really losing here? IMO it's the HFT algos / CLOBs. Intuitively it feels as if the retail gain comes at the expense of high-speed algos that can no longer take order flow from limit order books.

Who is pulling quotes when retail needs to hit the bid in a crisis? Not Uniswap LPs. We're asleep or not paying attention. LPs are less cutthroat than HFT, and so it attracts a lot of retail order flow (retail always has a bid to hit!), and so it cuts into algo fees.

Anyways, it feels like HFT is upset that Uniswap LPs are leaving so much money on the table, and in the process hurting the market for HFT (hence why Uniswap volume is comparable to Coinbase). Probably some mistakes in this thread but I think the inefficiences are overblown.