Arbiters are a decentralized system of bots that monitor fills made by market makers and ensure fairness in the protocol.

Voting on the fairness of fills

When a market maker fills a retail order, a fill record containing information about the original order and fill is broadcast to every arbiter. Arbiters track liquidity for the given asset between the time the order was originally placed and the time it was filled. If the majority of arbiters believe the vote was fair, then the fill is determined fair and the trade settles normally, without slashing the market maker.
An order fill is considered fair if the market maker fills the order quickly and at the best price. Arbiters measure market liquidity from when the new order was assigned to the market maker, to when the order is filled by the market maker.
Fair Fills
If the market maker filled the order at the first opportunity the measured liquidity indicates was possible, then the arbiter will vote the fill fair.
Unfair Fills
In cases where the measured liquidity indicates that there was enough liquidity to fill the order, but the market maker waited beyond that point in time, then the arbiter will vote the fill unfair.

Staking and rewards

Arbiter bots are compensated for monitoring and voting on order fills. When an arbiter votes on the fairness of a fill, it will stake a certain amount of value in the form of tokens on the vote. If an arbiter votes with the majority of the arbiters on the fairness of the fill, then the arbiter will receive a rebate from the protocol for its participation in securing the protocol. However, if the arbiter votes against the majority, it will lose its voting stake.
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Voting on the fairness of fills
Staking and rewards