Abstract
Autonomous Market Makers (AMMs) rely on arbitrage for passive price updates, but liquidity fragmentation across blockchain networks presents a significant challenge.
FluxLayer is a three-layer framework designed to mitigate fragmented liquidity and maximize extractable value (MEV) in cross-chain environments. It integrates:
- A settlement layer for secure transactions.
- An intent layer for efficient order matching.
- An under-collateralized leverage lending vault to enhance capital efficiency.
Our evaluation shows FluxLayer improves cross-chain MEV by:
- Capturing more arbitrage opportunities.
- Reducing transaction costs.
- Optimizing liquidity distribution.
Core Challenges in Cross-Chain Liquidity
1. Liquidity Fragmentation
With over 200 blockchain networks, liquidity is dispersed across:
- Centralized exchanges (CEXs).
- Decentralized exchanges (DEXs).
- Isolated AMM pools.
2. MEV and Arbitrage
Arbitrage dominates MEV strategies, accounting for 87% of cross-chain value extraction (Danut et al., 2024). Key forms include:
- CEX-to-DEX: Non-atomic arbitrage due to settlement delays.
- DEX-to-DEX: Mostly intra-chain (e.g., Ethereum).
3. Existing Limitations
Current solutions face:
- High costs from third-party intermediaries.
- Slow finality (settlement times).
- EVM-centric restrictions.
FluxLayer Framework
Layer 1: Settlement Layer
- Utilizes Restaking AVS (e.g., EigenLayer) for faster finality.
- Supports smart contract and MPC wallet custodians.
👉 Explore how Restaking enhances security
Layer 2: Intent Layer
- Intent-centric architecture connects market makers directly.
Reduces order matching steps via:
- Guaranteed fulfilment.
- Fragmented order execution.
Layer 3: Leverage Lending Vault
- Under-collateralized loans (10x+ leverage).
- Enables searchers to amplify arbitrage opportunities.
Advantages Over Traditional Solutions
| Feature | FluxLayer | Conventional Bridges |
|-----------------------|-------------------------------|--------------------------------|
| Settlement Speed | AVS-backed fast finality | Slow messaging protocols |
| Cost Efficiency | Lower fees via intent matching| High intermediary costs |
| Liquidity Access | Omni-chain aggregation | Pool-limited (e.g., AMMs) |
FAQs
Q1: How does FluxLayer reduce MEV competition?
Cross-chain MEV is less exploitative than single-chain MEV due to non-atomicity, making arbitrage opportunities more equitable.
Q2: What blockchains does FluxLayer support?
FluxLayer is chain-agnostic, compatible with EVM (Ethereum) and non-EVM networks (e.g., Bitcoin via MPC wallets).
Q3: How does the leverage vault work?
LPs provide capital, which borrowers use with under-collateralized loans to scale arbitrage positions, creating a flywheel effect for liquidity.
👉 Learn about capital efficiency in DeFi
Conclusion
FluxLayer addresses cross-chain liquidity fragmentation through:
- Faster settlements (Restaking AVS).
- Cheaper transactions (intent marketplace).
- Higher capital efficiency (leverage vault).
By unifying these layers, FluxLayer unlocks omni-chain MEV potential while reducing costs and improving user experience.