Prior art and what is new

Regent did not invent its core idea. The idea of auctioning the arbitrage right of a pool and paying the proceeds to its LPs as rent comes from the am-AMM paper:

"am-AMM: An Auction-Managed Automated Market Maker", by Austin Adams, Ciamac Moallemi, Sara Reynolds and Dan Robinson (2024). Read it at arxiv.org/abs/2403.03367.

The paper is the primary source for the idea, and it is worth reading before this site. This page explains what Regent takes from it, what Regent adds, and which other work it stands on.

What am-AMM proposes#

In a standard AMM, arbitrageurs race each other to trade against a stale pool price, and LPs pay for that race. The am-AMM paper proposes to sell that position instead of giving it away.

In short, as we read the paper:

• Each pool has a single manager position.
• The position is auctioned continuously on-chain through a Harberger-style lease: whoever is willing to pay the highest rent holds it, and can be displaced by a higher bidder.
• The manager pays rent to the LPs for as long as it holds the position.
• In return, the manager sets the pool's swap fee, receives the fees, and can trade against the pool fee-free, which puts it first in line for arbitrage.

The competition moves from the block to the auction. The value that used to go to the fastest arbitrageur is bid away as rent, and the rent goes to LPs. The paper contains the model, the equilibrium analysis and the conditions under which this helps LPs. We do not restate its results here, and nothing on this site should be read as a claim made by its authors.

What is new in Regent#

Regent applies the idea to one specific market: tokenized equities on an L2, where the stock trades on an exchange with opening hours and the pool trades around the clock. That changes the problem. In crypto the leak is continuous and unpredictable. For equities a large part of it is scheduled: it arrives at the opening bell, after earnings, at halt resumptions and on Monday morning. A scheduled leak can be sold in advance. See The problem: LVR at the bell.

Regent makes four additions.

Session-based auctions on the equity calendar. The seat is not leased continuously. It is sold separately for each of five NYSE-calendar sessions: OPEN, DAY, POST, NIGHT and WEEKEND. The opening half hour and the weekend have different values, and each gets its own price. See Sessions and the calendar.

The bell window. For the first 20 seconds of OPEN, and of any halt resumption, only the regent can swap. On a first come, first served sequencer with blocks of ~100 ms, a fee-free swap alone does not put the regent first. The bell window does, and a right is easier to price than an advantage.

Upfront payment. The winner pays the full bid before the session starts. It is escrowed and streamed to in-range LPs second by second through Uniswap v4 donate(). There is no credit, no default and no liquidation, and LPs know the rate before the session starts. See Rent streaming and anti-JIT.

Oracle-bound DMM duties. During DAY, when the Chainlink tokenized-equity feed is fresh and the market status is open, the regent must keep the pool price within a band around the oracle, or its $RGNT bond is slashed per breach-second. Off-hours there is no reference price, so there are no duties. See Seat duties and slashing.

Side by side#

This table is a summary for orientation. The am-AMM column is our reading of the paper; the paper is the authority on what it says.

Neither column is better in the abstract. A continuous lease suits an asset whose leak is continuous. A session auction suits an asset whose leak follows a timetable. Regent has not been deployed, and none of its additions has been tested with real funds.

Other work Regent builds on#

Loss-versus-rebalancing (LVR). The measure of what LPs lose to arbitrage comes from "Automated Market Making and Loss-Versus-Rebalancing" by Jason Milionis, Ciamac Moallemi, Tim Roughgarden and Anthony Lee Zhang (2022). It gave the problem a name and a formula. Regent's framing of the opening gap as a quantifiable loss to LPs rests on it.

Uniswap v4 hooks. Regent is planned as a hook. Dynamic fees, the beforeSwap fee override, return deltas on liquidity removal and donate() are all Uniswap v4 features. Without them the design would need its own AMM. With them it needs one hook and a few contracts around it. See Architecture and contracts.

The exchange designated market maker model. Stock exchanges have long given one firm per listed stock a privileged role at the open and the close, in exchange for obligations to maintain a fair and orderly market. The pairing of a right with a duty comes from there. Regent's version is smaller and mechanical: a bounded set of rights, one price band, one bond.

Independence#

Regent is an independent project. It is not affiliated with, sponsored by or endorsed by the authors of the am-AMM paper, the authors of the LVR paper, or their employers. It is not affiliated with or endorsed by Uniswap, Robinhood, Chainlink, NYSE or any issuer of tokenized stocks. Names are used in plain text to describe what the design builds on. Any error in describing their work is ours.

The am-AMM paper says nothing about Regent. Whether session auctions produce meaningful rent for LPs in Stock Token pools is unknown until real auctions run. Rent depends on auctions and can be zero.