LST/LRT Arbitrage Recapture

A deep dive into Tempest's Flagship usage of knockout liquidity on Ambient

Introduction

Liquidity for Liquid Staking/Restaking Tokens is often the defining factor of their quality as a liquid yield source. Through our vast experience with LSTs and LRTs, Tempest ideated the Arbitrage Recapture Vault, a novel liquidity solution, made possible through Knockout Liquidity on Ambient Finance.

Functionality

Tempest's Arbitrage Recapture Vault is the first vault to internalize the MEV created when LSTs depeg, the most stressful time for LST/LRT Liquidity. Through knockout orders, each knockout order is able to capture the Delta at which the orders are place from the peg. This effectively creates an expendable buy wall that follows the peg of the LST/LRT.

Tempest is making LST/LRT Liquidity great again, recapturing all the profit for LPs and helping Liquid Staking Protocols push a new paradigm of liquidity returns previously only captured by active arbitrageurs. The achieves all of this while still being able to facilitate the same swaps that are possible through normal concentrated liquidity