The Auction Managed AMM (am-AMM) introduces a Harberger lease-based auction mechanism into PancakeSwap v4 pools, inspired by Austin Adam's paper link. Participants can bid for the right to control pool's swap fee by continuously outbidding each other.
Key aspects of the am-AMM implementation:
- Harberger Lease Auction: Control rights are continuously auctioned. The highest bidder gains control for a certain period but can be challenged at any time by a higher bid.
- Dynamic Fee Adjustments: The winner can supply a custom strategy to determine the swap fee rate dynamically. This creates a market-based solution to the optimal fee problem.
- MEV Redirection: Auction proceeds effectively get redirected to the pool, capturing the value of MEV for LPs.
- Acutions Run In Pool Currencies or Any ERC20 Token: The auction can be run in any ERC20 token or one of the pool's tokens.
- Additional CAKE Token Utility Increase CAKE token utility by running am-AMM auctions in CAKE token.
The RewardTracker is a composable & efficient solution to track and
distribute incentives for in-range Liquidity that can be combined with any hook.
- Any ERC20 Token: Incentive payouts can be in any token, enabling novel incentive structures. For example, distributing governance tokens, stablecoins, or even exotic assets as rewards.
- In-Range Liquidity Rewards: Only liquidity that falls into the active price range when swaps occur earns proportional rewards.
- Time-Varying Incentives: Rewards can be adjusted over time.
Key Components:
ArbiterAmAmmBaseHook.sol: Abstract base contract for the auction-managed AMM, handling rent payment logic and integration with the reward tracker.ArbiterAmAmmAnyERC20Hook.sol: Concrete implementation supporting arbitrary ERC20 tokens for rent and reward distribution.ArbiterAmAmmPoolCurrencyHook.sol: Variant that uses one of the pool's tokens as the rent/reward currency.RewardTracker.sol: Abstract contract implementing reward tracking logic, intended to be inherited and integrated with the PancakeSwap v4 hooks.
Combines Harberger Lease and Rewards-Per-Second tracking to distribute ERC20 rewards to active liquidity ranges.
Defines the methods related to the Harberger lease-based auction system, including depositing, bidding, overbidding, and withdrawing tokens.
Allows controlling the fee calculation logic. The auction winner can provide a custom strategy to dynamically adjust the swap fee - implementing IArbiterAmmStrategy interface.
Used by the AMM to get the current swap fee from auction winner. The call gas cost is limited by hook's parameter.
Specifies the methods needed to track and distribute rewards to active liquidity. This is at the heart of incentivizing LPs over time.