What is Akronswap?

TLDR

Akronswap is a decentralized exchange that protects LPs and swappers from negative maximal extractable value (MEV), specifically, LPs from loss-versus-rebalancing and swappers from sandwich attacks.

Majority of MEV is atomic swap arbitrage, according to Sorella Labs. And research finds that 80-90% of that value is captured by non-LPs, such as arbitrageurs, block builders and proposers.

Blockworks research, a very legit group, predicts that next generation AMMs will recapture LVR for LPs and that the two primary approaches are dynamic fees and auctions. Auctions are another form of dynamic swap fees because the winning bidder's execution price has implicit swap fees included in it. So it comes down to dynamic swap fees.

Akronswap implements dynamic swap fees mechanism that makes arbitrageurs's expected profit approach 0. Because the expected profit is not 0 but slightly positive, arbitrageurs still continue to constantly rebalance the pool's price to the market price. The dynamic swap fee is directly proportional to swap size so it provides good execution for small swappers. If swap size is small enough, swap fees can even be less than 0.01%.

In effect, 1. liquidity providers are protected during volatile times by receiving a significant share of arbitrageurs' profits through high dynamic swap fees, while earning most of the fees from highly-frequent-small-size swaps during stable times. 2. arbitrageurs still continue to constantly rebalance the pool to market price, 3. traders who swap small sizes get better prices.

Summary of Benefits

Liquidity providers

• LPs earn most of the fees from highly-frequent-small-size swaps during stable times.

• During volatile times, LPs capture a significant percentage of the arbitrage profits from arbitraguers through dynamic swap fees. In effect, LPs become "passive arbitrageurs": LPs on Akronswap stop losing money to arbitrageurs and start earning money together with arbitrageurs.

Swappers

• Swappers who swap small sizes pay almost zero dynamic swap fees if their swap amount is small, because dynamic swap fee is at most the price impact. For example, if the price impact is 0.5 bps, traders pay a fee of at most 0.5 bps.

• Traders are protected from front running, back running and sandwich attacks, which generate huge profits for attackers each week, because only one swap is allowed per block per direction.

• Arbitrageurs can use Akronswap to earn profits more frequently because for small arbitrages swap fees are very low, reducing the hurdle for arbitrage.