BRO-AMM: A Bonded Reconciliation Oracle AMM as a Low-Risk DeFi Primitive
Liquidity providers (LPs) in automated market makers lose value to arbitrageurs trading against stale on-chain prices, and no existing AMM bounds this loss by design, so passive liquidity is not yet a low-risk DeFiprimitive. BRO-AMM (Bonded Reconciliation Oracle AMM) is a Uniswap v4 hook built on one principle:after a block, chain history and signed market prices establish what each swap did to LPs, and that recordcan settle it. A price-correcting swap keeps an allowance per unit of volume, discovered on-chain; extractionbeyond it is recaptured for LPs from stake posted before trading, which also bounds what arbitrageurs canpay for block position. Traders who overpay mint a reputation token (REP) that lowers their fees. On sixmonths of Ethereum and Arbitrum ETH/USDC data, simulation shows LPs’ losses to arbitrage falling by 68–79% on Ethereum and 49–55% on Arbitrum, mainnet LPs’ net turning from a loss into a gain, and paymentsfor position falling by 71–89%, with arbitrageurs’ margin unchanged. Settlement costs 0.18× the gas of theswaps it settles.
Authors
- Tims Pečerskis (ORCID: https://orcid.org/0009-0001-6827-8418)
Publication Details
- Journal
- Zenodo (CERN European Organization for Nuclear Research)
- Published
- 2026-10-08
- DOI
- https://doi.org/10.5281/zenodo.23241545
- Primary Topic
- Blockchain Technology Applications and Security
- Type
- preprint