LayerZero Introduces MEV-Resistant Batch AMM Mechanism OTTER

LayerZero's research team, in collaboration with Oblivious Labs and Carnegie Mellon University, has published a paper proposing an AMM mechanism called OTTER (Optimal Truthful Trading with Excess Redistribution), aimed at enhancing resistance to MEV. This mechanism relies on censorship resistance of the underlying consensus and non-congested block space. OTTER performs batch settlement of buy and sell quotes within a block, utilizing a VCG-like auction method to ensure that honest quoting by traders and block producers is the dominant strategy. The outcome depends on the set of quotes rather than their order, preventing block producers from profiting through reordering, injecting malicious quotes, or misreporting their valuations. Unlike sequential transactions, this mechanism requires that the pool remains on the pricing curve after the batch concludes, and does not necessitate distributing all outputs of the batch to the current traders, thus generating a surplus. This surplus can be allocated to liquidity providers, traders, the pool itself, or validators, rather than being monopolized by the block producer.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.