Ethereum's fairest propAMM.
Since launch in 2022, Bebop has innovated on execution models in DeFi. Bebop RFQ has settled over $70 billion in onchain volume and is DeFi’s most battle tested and powerful trade execution system for professional grade execution.
Blockchains present unique coordination problems for traders and liquidity providers. Poor onchain pricing affects every participant and mass adoption can only begin if crypto assets and tokenized real world assets can trade onchain as close to fair price as possible. Second order DeFi like lending, borrowing, and yield all benefit from better onchain pricing. Every cent saved on execution is a boost to the earnings of the overall onchain economy. Beginning with Bebop RFQ, Bebop has aimed to solve these coordination problems with novel execution mechanisms by enabling market makers to step in and actively price assets.
Now, after a successful audit and contract upgrade, we are rolling out bopAMM (block oracle priced), our multi-maker propAMM infrastructure as the next step in our mission to constantly evolve onchain pricing and execution.
Onchain pricing is usually passive. It must conform to block times and consensus rules and legacy execution models had to build around these constraints. Native onchain mechanisms like the automated market maker (AMM) are great for price discovery for long tail assets and constant uptime for majors, but they cannot respond to the outside world without arbitrage. The only way new information can be priced into an AMM is when an arbitrageur comes in to take the pool’s stale price and trade it against a fresher offchain price. This is known as loss versus rebalancing (LVR) and is a major source of value loss onchain, resulting in wider spreads and a poorer trading experience across the board. Every dollar lost to LVR is a net loss for everyone except those actors involved in the arbitrage trade. These problems are even more acute for tokenized stocks and real world assets as even more of their volume is traded offchain on primary venues.
A proprietary AMM (propAMM), allows a market maker to price assets around an offchain oracle price. They submit their pricing updates to block builders ahead of taker transactions to ensure they are protected against toxic flow. However, normal PropAMMs often execute in a black box, leading to the possibility for variance between quote and actual output price, particularly if your trade lands at the bottom of a block. They can sometimes also present an attractive price to routers to get picked for a trade and then execute at a slightly worse price, a technique known as spoofing.
bopAMM takes this concept and introduces a fresh, executable price aggregated from multiple competing market makers to every block built by a partner builder. This price is published transparently and incorporated by block builders before taker trades. With this design, bopAMM ensures that takers receive a competitive aggregate price from makers determined by their view on the market, rather than a stale pool price determined by arbitrage. Market makers can price in new information with firm pricing and share the cost of pricing updates with other bopAMM makers and bopAMM takes this book to win order flow on behalf of all the makers in aggregate.
All a maker on bopAMM needs to do is submit their pricing and the Bebop infrastructure takes care of the rest. bopAMM is currently live with the following block builders (with more to come):
Market makers - Actively price assets as a propAMM without needing to build out their own dedicated propAMM infrastructure. Only the freshest quote at the end of the block gets executed on bopAMM, there is no risk of toxic takers “sitting on quotes”, which creates a much tighter market. Market makers can hold assets anywhere, including from a smart contract, and quote on both RFQ and bopAMM with the same assets. They can also utilize hooks to quote on bopAMM from assets held in a lending protocol or anywhere else onchain.
bopAMM - Neutral coordination layer that aggregates quotes from all bopAMM makers and presents this multi-maker book to win flow from aggregators and apps. Also handles landing pricing updates with block builders so that makers only need to connect and start streaming prices. It also distributes auditable data to all participants on equal terms and monitors for spoofing or false quoting that would result in penalties from routers.
Block builders - Receive the oracle update and incorporate it into candidate blocks. They continuously rebuild as new information arrives, ensuring pricing is as fresh as possible at proposal time, and ensuring trades are sequenced after the update. This way, market makers can always update their pricing prior to a taker trade.
Takers - Trade permissionlessly against bopAMM liquidity onchain, either directly or via aggregators, wallets or dApps. Because bopAMM pricing is driven by coordinated quote formation rather than directly inferable pool curves, participants who rely on transaction pre-simulation also consume pricing and liquidity information offchain.
A mult-maker setup like bopAMM is fairer for both sides of a trade. Takers can always trade at the freshest price (sometimes even better than centralized exchanges net fees) and as it’s a multi-maker book, they can be reasonably sure they are getting the best aggregate price. Market makers can win more order flow by quoting tighter and faster due to less toxic flow overall; they can always determine what price the trade clears at as the taker trade will always land after their pricing update in the block.
Bebop RFQ’s edge is in aggregation across multiple market makers. To receive this kind of pricing, you would usually have to deal with the overhead of onboarding with multiple market makers and request quotes from all of them. We are taking this principle to bopAMM as well: an aggregated book presents the best possible price and removes the possibility of a single maker propAMM drifting on price or spoofing.
Trading on bopAMM is particularly well suited for onchain arbitrageurs and MEV searchers as they can easily take fresh bopAMM pricing and trade against stale onchain pools.
bopAMM is live and ready for traders and market makers via API. It is currently available as a route in Kyber Network and De1 and will soon be available in all major aggregators.
