This is more of an extended comment than a full answer, but here goes.
I will add assumptions along the way.
Assume $n$ is odd.
Denote $a=f(0)$ and $b=(-2a)^{1/n}$.
If we set $x=b$ and $y=0$, the original equation gives $f(b)=0$.
If we choose $y=b$, the original equation gives $f(x^n)=f(x)^n+b$ ($\star$).
Assume $f$ is continuously differentiable.
Differentiate ($\star$) and set $x=0$ to get $f(0)=0$ or $f'(0)=0$.
Differentiating the original equation with respect to $y$ and putting $x=0$ gives
$1=f'(y)(2f'(2f(y))-1)$.
This implies $f'(0)\neq0$, so we must have $f(0)=0$.
Thus in the earlier notation $a=b=0$.
Now ($\star$) gives $f(x^n)=f(x)^n$.
Differentiating this $n$ times and letting $x=0$ (and remembering $f(0)=0$) gives $f'(0)=f'(0)^n$, whence $f'(0)=\pm1$.
But we got $1=f'(y)(2f'(2f(y))-1)$, and at $y=0$ this yields $1=f'(0)(2f'(0)-1)$, so that $f'(0)=1$.
Using the equation $1=f'(y)(2f'(2f(y))-1)$ again we see that $f'(y)>0$ and $f'(2f(y))>\frac12$ for all $y$.
Thus $f$ must be strictly increasing (and diffeomorphic to its image).
Let $S=\sup f$ and suppose $S<\infty$.
Now for all $t\in(0,2S)$ we have $f'(t)>\frac12$, so by the fundamental theorem of calculus $f(2S)>S$, a contradiction.
A similar argument works in the other direction.
Thus $f(\mathbb R)=\mathbb R$ and $f'>\frac12$ everywhere.
(And so $\pm2f(y)>\pm y$ for $y>0$ if that helps.)
Assume $f$ is twice continuously differentiable.
Differentiating the equation $1=f'(y)(2f'(2f(y))-1)$ gives
$$
(2f'(2f(y))-1)f''(y)+4f'(y)^2f''(2f(y))=0.
$$
At $y=0$ we obtain $f''(0)=0$.
Note that the coefficients $(2f'(2f(y))-1)$ and $4f'(y)^2$ are always strictly positive.
Therefore $f''(y)f''(2f(y))\geq0$ implies $f''(y)=f''(2f(y))=0$.
I was hoping that something like this could show that $f''$ vanishes identically and thus $f(x)=x$, but I don't know how to proceed.
Summary:
If $f\in C^1$ and $n$ is odd, then $f:\mathbb R\to\mathbb R$ is a bijection satisfying $f'(x)>\frac12$, $f(0)=0$, $f'(0)=1$ and $f(x^n)=f(x)^n$.
Also, if $f\in C^2$ and $f''$ has constant sign, then $f(x)=x$ for all $x$.