Paper 2022/155

FairTraDEX: A Decentralised Exchange Preventing Value Extraction

Conor McMenamin
Vanesa Daza
Matthias Fitzi
Padraic O'Donoghue

We present FairTraDEX, a decentralized exchange (DEX) protocol based on frequent batch auctions (FBAs), which provides formal game-theoretic guarantees against extractable value. FBAs when run by a trusted third-party provide unique game-theoretic optimal strategies which ensure players are shown prices equal to the liquidity provider's fair price, excluding explicit, pre-determined fees. FairTraDEX replicates the key features of an FBA that provide these game-theoretic guarantees using a combination of set-membership in zero-knowledge protocols and an escrow-enforced commit-reveal protocol. We extend the results of FBAs to handle monopolistic and/or malicious liquidity providers. We provide real-world examples that demonstrate that the costs of executing orders in existing academic and industry-standard protocols become prohibitive as order size increases due to basic value extraction techniques, popularized as maximal extractable value. We further demonstrate that FairTraDEX protects against these execution costs, guaranteeing a fixed fee model independent of order size, the first guarantee of it's kind for a DEX protocol. We also provide detailed Solidity and pseudo-code implementations of FairTraDEX, making FairTraDEX a novel and practical contribution.

Available format(s)
Publication info
Decentralized Exchange Blockchain Extractable Value Incentives Zero Knowledge
Contact author(s)
conor mcmenamin @ upf edu
2022-08-04: revised
2022-02-12: received
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Creative Commons Attribution


      author = {Conor McMenamin and Vanesa Daza and Matthias Fitzi and Padraic O'Donoghue},
      title = {FairTraDEX: A Decentralised Exchange Preventing Value Extraction},
      howpublished = {Cryptology ePrint Archive, Paper 2022/155},
      year = {2022},
      note = {\url{}},
      url = {}
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