Summary: "Sidepit: Fair Price Discovery via Decentralized Exchange" discusses challenges in decentralized exchanges (DEXs) and proposes a solution for fair price discovery. DEXs aim to replicate market processes on a blockchain, but issues like front-running persist due to blockchain's asynchronous nature.
The proposed solution, called "Sidepit," involves a network of exchange nodes hosting matching engines and order books. Consensus is reached through a multi-step process, neutralizing the advantage of high-frequency trading, eliminating the need for front-running, and preventing unfair strategies.
The paper emphasizes designing DEXs with fair price discovery in mind, using distributed mechanism design and game theory to align incentives for participants and achieve the exchange's intended goals.