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We fix LVR (loss versus rebalancing, esp. wrt CEX) in Uniswap v4 pools by distributing the arbitrage MEV back to LPs


Created At

ETHGlobal London

Winner of


Chiliz - Pool Prize

Prize Pool


Nethermind - Maximal Extractable Value (MEV) innovations 1st place


Arbitrum - Qualifying Arbitrum Submissions

Prize Pool

Project Description

Fixing LVR (loss versus rebalancing, esp. wrt CEX) in Uniswap v4 pools works by requiring arbitrageurs (Arbers) to bid for first transaction rights in a block for a particular pool they are getting extra MEV from. Fees collected from auctioning first execution rights are then redistributed back to LPs by donating to the pools the MEV was collected from.

We achieve this by using SUAVE: We run a SUAPP in a TEE to credibly offer private second-bid (Vickery) auctions for top-of-block swap rights. The winning bidder of the auction is furnished with a signed TEE attestation by the SUAPP which is then provided alongside the swap data to the Uniswap V4 pool. Preswap hooks check for the validity of this attestation and enforce appropriate ordering during the block building process.

How it's Made

Our SUAVE trusted execution environments can now run credible auctions for any chain; bidders submit private bids in proximity to the block creation deadline of the chain they want to execute an arb swap on. Payment for the bids is provided ahead of time to a contract which acts as a deposit registry. The contract stores funds for Arbers allowing them to bid on multiple auctions on different pools without explicitly providing a different deposits each time. Funds are only taken from Arber deposits when they win the right to have preferential transaction inclusion in a block; such accumulating proceeds may then be re-distributed to the LPs of the pool, by anyone.

The SUAVE auction resolves quickly, providing a signed message to the winner which can then be passed to the Uniswap V4 pool as additional hookData accompanying their swap transaction. A v4 pre-swap hook then verifies the validity of the signed message data and compares it to the swap that has been submitted. If valid, an execution ordering condition is imposed on successful execution of transactions for this pool, resulting in adequate ordering created by block builders.

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