How did you integrate our partners, if any? Built using EigenLayer's official Hourglass and DevKit template for AVS development, providing distributed consensus through multiple operators who validate price discrepancies and auction results, cryptoeconomic security via slashing mechanisms, and scalable architecture on EigenLayer's proven AVS infrastructure. The project implements both L1/L2 connectors and Go performers following EigenLayer best practices.
Github:https://github.com/Najnomics/LVR-Auction-Hook Slides: https://gamma.app/docs/LVR-Auction-Hook-Atrium-Hackathon-Submission-9xaq5p7psp28iwa Project Link: Demo Video:https://youtu.be/iag28PyhjAM
Traditional AMMs suffer from severe value extraction that harms liquidity providers through Loss Versus Rebalancing (LVR). Arbitrageurs extract over $500M annually from stale AMM prices during the 13-second block time windows, while LPs bear these losses without compensation. Current PBS auctions benefit validators rather than the affected liquidity providers, creating a fundamental misalignment where those providing liquidity suffer the costs but receive none of the MEV auction proceeds. Our solution addresses this by capturing arbitrage opportunities at the pool level through Uniswap v4 hooks and redistributing auction proceeds directly to LPs who suffer the price impact, effectively turning their LVR losses into revenue streams
This is the first implementation to directly redistribute MEV profits to liquidity providers through cryptoeconomically secured auctions at the AMM level. Key innovations include: (1) EigenLayer-secured auction integrity preventing manipulation, (2) first-in-block trading rights auctions that capture arbitrage value before it's extracted, and (3) proportional distribution of auction proceeds to LPs based on their liquidity contributions. The economic impact includes 60-80% reduction in LVR losses for participating pools, with potential to redistribute $50M+ annually from sophisticated arbitrageurs back to retail and institutional LPs, fundamentally changing the economics of liquidity provision.
The primary challenges included: (1) Integrating complex auction mechanisms within Uniswap v4's hook architecture while maintaining gas efficiency, (2) coordinating between EigenLayer's AVS for distributed consensus and the on-chain hook for immediate execution, (3) designing sealed-bid auctions that prevent collusion while ensuring fair price discovery, (4) implementing accurate price monitoring across multiple CEXs and handling the timing complexity of 8-second auction windows, and (5) ensuring auction proceeds are fairly distributed to LPs proportional to their actual LVR exposure.
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