Current Core Pool

Problem statement

Loss Versus Rebalancing (LVR) is a form of maximal extractable value (MEV) that has a greater impact on liquidity providers than all other forms of MEV combined. LVR can cost LPs 5–7% of their liquidity annually, accounting for hundreds of millions of dollars in opportunity costs each year.
LVR is only significant for volatile pairs such as WETH/USDC. If the price of the pair does not move for a year, such as that of USDT/USDC, then LVR would be ~0.
a16z explains LVR in simple terms: “Money made by that arbitrageur is exactly the money lost by the liquidity provider… [LVR] tells you exactly how much [LPs] are losing due to being on the wrong end of trades of arbitrageurs”

On swaps, transfer LVR, or money made by arbitrageurs, from arbitrageurs to LPs, thus giving back to LPs what cost them 5–7% annually.

Akron Hooks aims to not just to reduce but eliminate MEV, by eliminating LVR for LPs and sandwich attacks for swappers.

Akron Hook implements dynamic swap fees on swaps, in order to transfer the “money made by arbitrageurs” to LPs.

$$ dynamicSwapFee = moneyMadeByArbitrageur $$

How is “money made by arbitrageurs” calculated?