One post tagged with "thermodynamics"

Multiswap's Post-Trade Elasticity Model was not derived from thermodynamics. It was developed as a market-design framework: define Reserve Asset states, couple trades through execution value, preserve aggregate accounting, and identify state transitions that cannot weaken the pool's safety position.

Yet the resulting mathematics has a distinctly thermodynamic structure.

The pool has a state space. Value-flow balance constrains exchanges across its boundary. Coefficient inequalities define a cone of locally admissible processes. Finite coefficient multipliers integrate those inequalities across complete transitions. A logarithmic entropy summarizes the resulting irreversible motion. The execution-price rule acts as a constitutive law: it determines whether the balance equations naturally carry an ordinary swap through the admissible region.

This is more than a verbal analogy, but less than an identification with physical thermodynamics. Multiswap does not have a literal temperature, heat bath, or molecular entropy. The precise claim is structural:

The Post-Trade Elasticity Model has the same mathematical separation between state, balance laws, admissibility, entropy production, and process law that makes thermodynamics a general theory of physical processes.

That separation is useful. It clarifies what coefficient safety proves, what execution pricing contributes, why entropy is informative but incomplete, and why a state-safe operation can still have unfair consideration or MEV exposure.

This article develops that structure from first principles for positive scale elasticity,

It assumes exact arithmetic, positive reserves and scales, and homogeneous elasticities. The thermodynamic interpretation is a mathematical framework for reasoning about the model, not a claim that every thermodynamic theorem automatically applies to Multiswap.