BRO-AMM: A BONDED RECONCILIATION ORACLE AMM AS A LOW-RISK DEFI PRIMITIVE

Summary from the TLDR Crypto newsletter

AMM liquidity providers on Ethereum lose money to LVR (loss versus rebalancing), with MEV bots capturing most arbitrage profits from price gaps between pools and external markets. BRO-AMM addresses this by combining oracle-verified post-trade reconciliation windows, mandatory trader collateral, and reputation-tiered fees to compensate legitimate arbitrageurs while penalizing excess extraction. Six-month ETH/USDC simulations show 68-79% reductions in arbitrage losses on Ethereum and 49-55% on Arbitrum, with Ethereum depositors shifting from net losses to profitability. The proposal depends on trusted oracle data and remains simulation-only, pending live validation.