Automated Market Maker-based Batch Auction for Decentralized Customer-centric Local Energy Sharing

Traditional marketplaces, like order book solutions, for Peer-to-Peer (P2P) energy trading are often unable to efficiently manage decentralized trading, especially when faced with low liquidity and limited participants. To address this challenge, this paper introduces the Automated Market Maker (AMM)-based batch auction (AMMBA) trading mechanism, designed to improve the efficiency and fairness of P2P energy markets. AMMBA combines the strengths of both batch auctions and AMMs by taking frequent clearing and uniform pricing from batch auctions and decentralized algorithmic pricing from AMMs. The batch auction clearing method is replaced by a sigmoid price function. In each market window, producers generate energy tokens from surplus production. Buyers add stablecoins to the liquidity pool reflecting their energy requirements, with the clearing price adjusted at the window’s end using the sigmoid function. Ultimately, stablecoins and energy tokens are distributed to sellers and buyers, respectively. Simulation results show that AMMBA not only secures significant gains for all parties involved but also exhibits high adaptability to real-time demand and supply fluctuations.