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Post 3 — @Arrakis

Created: 2025-12-04T14:41:32.421Z

Hi @Karolak , Thank you for the questions. Let us address them for you.

Performance Fee & Loss Coverage

The 50% performance fee applies strictly to the trading fees generated by the vault. These fees arise when the vault facilitates swap volume, which is exactly the behavior we aim to maximize by providing deep, efficiently placed liquidity.

As with any DEX LP position, impermanent loss is an inherent risk, and we do not offer loss coverage. What we do provide is an active management system designed to significantly reduce IL relative to passive or manual LPing.

Protection Against MEV & Sandwich Attacks

We’ve engineered multiple layers of defense that make typical MEV vectors either ineffective or economically unviable:

Rebalance-level validation of total underlying assets:

Each rebalance verifies the total asset composition, preventing attackers from manipulating token inputs/outputs in a way that could produce a profitable sandwich.

TWAP-based pricing enforced via oracles:

Rebalances follow TWAP pricing rather than single-block prices, and when available, we enforce oracle pricing directly on-chain. This removes the timing window that MEV searchers normally exploit.

  1. Multi-block MEV becomes the only theoretical avenue, and is prohibitively expensive:

With both mechanisms in place, an attacker would need to coordinate multi-block manipulation to influence a rebalance, something that is extremely costly and practically infeasible.

Extensive auditing:

These attack vectors are well-known, and our contracts have undergone audits by three independent firms. No vulnerabilities related to MEV/sandwich manipulation were identified.

On LPT Sales, Execution, and Handling of Earnings

Arrakis Pro uses custom algorithms to place one-sided limit orders that gradually convert the base asset into the quote asset as organic demand trades through the pool. This is effectively a TWAP-like, programmatic process rather than a discretionary market or limit order. Once the inventory is balanced, we transition from the bootstrapping phase to the maintenance strategy, where the system continuously manages ranges to preserve deep bid/ask liquidity.

All earnings generated for the DAO are automatically compounded back into the vault to increase liquidity depth and overall performance. If the DAO prefers, funds can, of course, be withdrawn to the multisig at any time.