An AMM minimizing user-level extractable value and loss-versus-rebalancing

We present V0LVER, an AMM protocol which solves an incentivization trilemma between users, passive liquidity providers, and block producers. V0LVER enables users and passive liquidity providers to interact without paying MEV or incurring uncontrolled loss-versus-rebalancing to the block producer. V0LVER is an AMM protocol built on an encrypted transaction mempool, where transactions are decrypted after being allocated liquidity by the AMM. V0LVER ensures this liquidity, given some external market price, is provided at that price in expectancy. This is done by providing just enough loss-versus-rebalancing profits to the block producer, incentivizing the block producer to move the pool price to the external market price. With this, users transact in expectancy at the external market price in exchange for a fee, with AMMs providing liquidity in expectancy at the external market price. Under block producer and liquidity provider competition, all of the fees in V0LVER approach zero. Without block producer arbitrage, V0LVER guarantees fall back to those of an AMM capable of processing encrypted transactions, free from loss-versus-rebalancing or user-level MEV.