01 · Protocol Overview: BrownFi vs the Market
BrownFi is an oracle-based AMM that anchors every swap price to live external oracles, not to a bonding curve or pool depth. This reduces stale-price arbitrage (LVR) and allows the pool to offer competitive pricing with far less capital than traditional AMMs. BrownFi V3 is built on the same codebase as Uniswap V2. On top of that, it adds asymmetric liquidity concentration for base and quote assets (Kappa parameters), a formal bid-ask spread, and dynamic adaptive pricing, delivering concentrated liquidity efficiency without active position management. Multichain, fully audited.
LP Outcome
Lower impermanent loss, but significantly higher yields than Uniswap V2.
| Feature | Uniswap V2 | Uniswap V3 | BrownFi V3 |
|---|---|---|---|
| Capital Efficiency | ✗ 1× (full range) | ~ Concentrated | ✓ Up to 200× |
| LVR / Arb Extraction | ✗ High (LP bleeds) | ✗ High (LP bleeds) | ✓ Minimized (oracle-based) |
| Impermanent Loss | ✗ Moderate | ✗ Severe (out-of-range) | ✓ Minimized |
| Active Management | ~ Not needed | ✗ Required (ranges) | ✓ Not needed |
| Oracle Protection | ✗ None | ✗ None | ✓ Multi-source + guard |
| Bid-Ask Spread Income | ✗ None | ✗ None | ✓ Fixed + Dynamic |
| Liquidity Always Deployed | ~ Yes | ✗ Goes out of range | ✓ Always active |
✗ bad · ~ neutral · ✓ BrownFi advantage · LP tokens are standard ERC20s; no position management, no rebalancing required.
02 · Pricing Model: Four-Layer Architecture
Sources
Pyth + AMM
off-chain oracle
on-chain TWAP
on-chain TWAP
→
Layer 1
Oracle Blend
w·Pyth + (1-w)·AMM
divergence guard
divergence guard
→
Layer 2
Skew Price
adjusts for pool
imbalance (bounded)
imbalance (bounded)
→
Layer 3
Bid-Ask Spread
fixed baseline +
dynamic (oracle gap)
dynamic (oracle gap)
→
Layer 4
Kappa Impact
K ∈ [0.0001, 2]
asymm. KB / KQ
asymm. KB / KQ
→
Output
Execute
final price
offered to trader
offered to trader
1
Reference Price
Anchors every swap to a live external oracle price, not pool depth. If price feeds disagree beyond a safe threshold, the trade is rejected to protect LPs.
2
Bid-Ask Spread
Every swap pays a small spread above or below the mid-price. The spread widens automatically during volatile markets, so LPs earn higher fees exactly when risk is highest.
3
Price Impact (Kappa)
Controls how tightly liquidity is concentrated around the current price. A lower Kappa means a deeper, more capital-efficient pool, and it adjusts independently for buy and sell sides.
① Oracle blend + divergence guard
ref_price = oracle_price × weight + pool_price × (1 − weight)
→ trade reverts if |oracle_price − pool_price| / ref_price > threshold
② Inventory skew adjustment
· skew_factor = λ × (base_value − quote_value) / (base_value + quote_value)
· skew_price = ref_price × (1 − skew_factor)
→ nudges pool back toward 50/50
③ Bid-ask spread prices
sell_price = skew_price × (1 + spread)
buy_price = skew_price × (1 − spread)
spread = base_fee + volatility_premium → widens when markets are uncertain
④ Swap execution (Kappa)
amount_out = amount_in × price × (1 + price_impact)
price_impact ∝ trade_size / (pool_depth × K) → lower K = deeper pool, less slippage
03 · Architecture & Core Smart Contracts
BrownFi's smart contracts are built on the Uniswap V2 contract architecture, with a proprietary oracle-based pricing engine on top, independently audited by Zenith and Sherlock with zero high-severity findings.
| Contract | Role | Berachain | HyperEVM |
|---|---|---|---|
| Factory | Deploys V3 pairs (PairCreator role) | 0x6Ccf…cD28 | 0x6Ccf…cD28 |
| Router | Swap entry: exact-in & exact-out | 0x63D8…209a | 0x63D8…209a |
| Oracle Gateway | Aggregates Pyth + AMM TWAP; outputs skew & spread price | 0x3150…a75 | 0x3150…a75 |
| V3 Pair | Reserves, LP mint/burn, protocol fee | factory-deployed | factory-deployed |
| Config Contract | All tunable params (K, fee, spread, λ, γ), stored outside the pool | 0x4955…c43a | 0x4955…c43a |
04 · Security Audits
✓
Zenith Security
Apr 27–30, 2026 · BrownFi V3 full codebase
ALL
CLEAR
CLEAR
●Critical0
●High0
●Medium4 - resolved
●Low / Informational14 - resolved
✓
Sherlock
May 11–16, 2026 · BrownFi V3 full codebase
ALL
CLEAR
CLEAR
●Critical0
●High0
●Medium2 - resolved
●Low / Informational6 - resolved
Zero critical or high-severity findings across both audits. All issues were resolved or accepted as intentional design choices. LP withdrawals remain executable even during emergency pause, so funds are never locked. Both reports are available on request.
05 · Backtesting & Performance Evidence
Pool TVL vs Buy-and-Hold · ETH/USDC · Berachain · 277 Days (Aug 2025 – Jun 2026) · $1.00 starting capital
BrownFi V3 Dynamic
BrownFi Static
Buy & Hold
BrownFi V3 Dynamic
$3.39
Sharpe 1.68 · +274% vs BnH
BrownFi Static
$2.29
Sharpe 0.98 · +153% vs BnH
Buy & Hold
$0.90
ETH fell −19%
⚠ In-sample backtest · ETH/USDC · Berachain · 2-second blocktime · idealized fill model; actual results will differ · Starting capital $1.00 · Not financial advice
06 · Recent Live Performance
Real LP positions on BrownFi V3 Beta · Berachain · as of Jun 24, 2026
WETH / USDC.e
Berachain
V3 Official
Fee 0.03%
+1.15%
LPing PnL (+$45.1)
+0.91%
HODL PnL (+$35.82)
~8.4%
Annualized LP edge vs. HODL
WETH / WBTC
Berachain
V3 Official
Fee 0.1%
−3.88% (−$352.07)
LPing PnL
−4.27% (−$387.66)
HODL PnL
~14.7%
Annualized LP edge vs. HODL
BERA / HONEY
Berachain
V3 Official
Fee 0.2%
−3.05% (−$167.14)
LPing PnL
−4.13% (−$226.46)
HODL PnL
~40.7%
Annualized LP edge vs. HODL