Mev Module

A set of advanced permissioned engines that capture and redistribute MEV value back to protocol participants, esuring there is no value leak to outside extractors, bringing capital efficency to the next level.

x33 AMO

(LIVE ✅) The X33 AMO arbitrages the redeem floor and gives back to voters ensuring all value is kept inside the protocol instead of going to outside arbitragers.

Backrun Arbitrage

COMING SOON LPers are exposed to LVR and adverse costs from toxic MEV bots. Our backrun module will frontrun every arbitrage and give it back to where it belongs, our users.

Stopping Exploitative Liquidity on Shadow Exchange

1. What Is Exploitative Liquidity?

Some liquidity providers (LPs) exploit decentralized exchanges (DEXs) by adding tight, one-tick liquidity positions to maximize token rewards, which are streamed per second to in-range liquidity. Using mempool access, they withdraw liquidity when a large swap is detected, avoiding impermanent loss while claiming rewards without supporting trades.

How It Works

• Tight Position: LPs add liquidity in a narrow, one-tick range to earn maximum rewards per unit of capital.
• Mempool Watch: They monitor the mempool for incoming swaps that could shift prices and cause losses.
• Quick Exit: Before the swap hits, they remove liquidity, dodging impermanent loss.
• Reward Grab: They still collect rewards for the brief time their liquidity was active.

This undermines genuine LPs who maintain stable liquidity and bear market risks.

2. Why DEXs Are Vulnerable

DEXs often fall prey to this exploit because:

• Instant Reward Streaming: Rewards are paid per second and don’t have proper mechanisms which require sustained liquidity.
• No Holding Period: LPs can withdraw instantly, avoiding losses from swaps.

Shadow Exchange tackles these issues head-on with targeted solutions.

3. Shadow Exchange’s Solutions

Shadow Exchange prevents exploitative liquidity with three mechanisms, supported by multiple novel systems:

1. Abuse Prevention Module (LIVE ✅)

   • Using quantitive subgraph data and external monitoring, the protocol utilizes this module to prevent abuse from unproductive liquidity.

2. Delayed Rewards (SOON ❌)

   • Requires LPs to hold liquidity for a minimum time before claiming rewards.

3. Fee Growth Tracking (SOON ❌)

   • Links rewards to swap fees earned, rewarding actual trading support.

4. Conclusion

Shadow Exchange’s innovative solutions stop exploitative one-tick liquidity strategies. By rewarding only LPs who provide sustained, trade-supporting liquidity, Shadow ensures a fair and stable DEX for all users.