For Liquidity Providers
Unlock Extra Yield & Capture Arbitrage Profits: Earn from Pool Management Auctions!
As a Liquidity Provider (LP) on PancakeSwap Infinity, you already earn trading fees. But what if you could earn even more from the very management of the pools you contribute to, and even capture a portion of the arbitrage profits that typically go to others? The Arbiter PancakeSwap Infinity AmAMM Hook introduces a unique way for LPs to earn additional income through a "Harberger Lease" auction system.
How You Benefit
Boosted Returns from Rent: Beyond standard trading fees, you'll earn a share of the "rent" paid by professional "Strategists" (also known as "Winners") who bid for the right to manage your pool's swap fees. This means more income for your liquidity.
Incentivized Fee Optimization: The Winner (the Strategist controlling the pool) takes only 5% of the trading fees. This structure highly incentivizes the Winner to optimize the pool's fee earnings, as the vast majority (95%) of the trading fees still go to you, the LPs. This directly addresses the "Loss vs. Rebalance" problem, as the Winner is motivated to ensure the pool remains profitable and efficient, reducing potential losses for LPs that arise from suboptimal rebalancing or fee structures.
Capture Arbitrage Profits: Traditionally, profits from arbitrage opportunities on your pool are spread among many independent arbitrageurs and even block producers. With the Arbiter hook, the Winner becomes the sole, incentivized arbitrager on the pool. This means a significant portion of what was once "lost" to external arbitrageurs is now captured:
The Winner earns substantial profits from optimized arbitrage strategies.
A portion of these increased profits (via the Winner's rent payments and efficient fee collection) are then distributed back to you, the LPs. This mechanism effectively funnels a greater share of the pool's overall profitability back to the liquidity providers.
Automatic Passive Income: When the auction for managing your pool uses tokens that are already part of the pool (e.g., in an ETH/USDT pool, rent is paid in ETH or USDT), your rewards are automatically distributed to you. You don't need to take any additional action to collect these earnings.
Completely Hands-Off: Enjoy passive additional earnings without any extra steps or subscription requirements on your part.
Support for Healthy Ecosystem: By participating, you enable a dynamic system where the best strategies are incentivized to manage your pool, potentially leading to more efficient markets and better trading conditions for everyone.
How It Works for You (The LP)
The core idea is that someone "leases" the right to control certain aspects of a liquidity pool, specifically its swap fees and how it interacts with arbitrage. This lease is continuously auctioned off, and the payments from this lease, plus optimized fee collection, go directly to you, the Liquidity Provider!
You Provide Liquidity: You add your tokens to a PancakeSwap Infinity pool, as you normally would, and receive your LP position.
Strategists Bid for Control: Professional Strategists deposit tokens and bid for the exclusive right to manage the swap fees of that specific pool and execute arbitrage. They pay a "rent per block" to hold this right.
Your Liquidity Earns Rent (Automatically!): A portion of the rent paid by the winning Strategist is distributed to the LPs of that pool. This distribution happens automatically through "donations" to the pool whenever a swap occurs or liquidity changes. It's seamless!
Optimized Pool Performance Benefits You: The winning Strategist is highly motivated to keep the pool liquid and optimize fee generation, as they profit from efficient arbitrage and a small percentage of trading fees. This direct incentive benefits LPs by reducing impermanent loss and maximizing overall pool profitability.
Continuous Earnings: As long as there's an active Harberger Lease auction on your pool, your liquidity will continuously accumulate additional earnings and benefit from the Winner's optimized strategies.
In essence, the Arbiter AmAMM hook transforms your liquidity into a revenue-generating asset beyond just swap fees, by allowing a professional strategist to optimize pool performance and capture arbitrage profits, a significant portion of which are then redirected to you.
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