LayerZero Co-Releases Paper, Proposing MEV-Resistant Automated Market Maker Mechanism OTTER

The LayerZero research team, in collaboration with Oblivious Labs and researchers from Carnegie Mellon University, has released a paper introducing a new automated market maker mechanism called OTTER, aimed at enhancing resistance to Maximum Extractable Value (MEV). OTTER utilizes a batch clearing mechanism similar to VCG auctions, making it a dominant strategy for traders to truthfully report valuations and budgets, while weakening the ability of block builders to profit through transaction ordering, sandwich attacks, or injecting fake bids. This mechanism redistributes residual value, which might otherwise be captured by MEV, back to liquidity providers, traders, liquidity pools, or underlying chain validators, thereby reducing the impact of builder advantages on ecosystem value distribution.