OPRR Flash Depth Activities

Search Extension

Thoughts on the MEV Track by Reviewing Eden Network

2021-09-10 15:21

Read this article in 19 Minutes

AI summary

View the summary

Original title: 'MEV Track | Eden Network Review '

原文来源：陆遥远

Miner Extractable Value (MEV) is Miner Extractable Value.

In a word, MEV is a means for POW miners (POS verifier and sequencer) to obtain profits by sorting transactions in production blocks. Controlling the computing power equals controlling the sorting right, and the larger the sorting right is, the more profits can be extracted.

MEV is not only exist in the ETH, have already spread to BSC/Polkadot/Terra/Polygon/xDai male other chain.

MEV is not a bad thing, but can also be divided into benign MEV, bad MEV and malignant MEV. MEV for arbitrage between agreements, MEV for hacking attacks, and MEV transfer of stolen wallets are benign MEV. Sandwich attack on a regular user of DEX trading, Uniswap/Sushi/Balancer/NFT trading on to beat up a bad MEV. A time-bandit chain recombination attack is a vicious MEV.

The history of MEV

As early as 2014, the etheric community raised the issue of miners' preemption and aroused the concern of the etheric community. Fomo3D miners' refusal to pack up and win the final prize was also a MEV behavior. Until 2019. 2.0 Publish related papers & NBSP; In Paradigm's description of Ethereum as a dark forest, MEV began to gain a small amount of attention, but at the time MEV did not have that much impact on the majority of users because only a small percentage of the market was using Defi.

In 2020, MEV track was really discovered by the head organization, and Flashbots community was born, an organization aimed at reducing Negative Externality and risks of MEV. They provided MEV-Geth for MEV users to bid on, designed a more open and democratic MEV market, lowered the bar for on-chain robots, and allowed scientists without mining pools to pay for computing power to use MEVs. As a result, the chain robots are wrapped up, and the small robots are not enough to defeat the big ones. The space for arbitrage is getting smaller and smaller until the computing power of Flashbots reaches 70-80%, and a large number of maintainers of small robots begin to give up.

With the Defi explosion in 2021, a large number of users started using native Ethereum apps, and MEV is really affecting these users, the most common impact being the sandwich attack, which caused permanent damage to Defi users. In order to solve the impact of MEV, many anti-MEV applications have emerged, such as privacy node Taichi/BloXroute, improved AMM protocol A2MM, limit order 0xRFQ, bulk auction Cowswap, Eden Network, etc.

Mevs are inherently unfair and will continue to exist and grow if Ethereum does not make underlying changes and upgrades. The community has done research in several directions, such as fair sorting, privacy technology and democratization MEV, hoping to solve this problem, but the results need to be observed continuously.

The reason why MEV track is worth studying lies in the increasing value of MEV, which actually exceeds the statistics of Flashbots and makes a breakthrough in multi-chain and multi-form. MEV is directly affecting ecological users, and the extracted value itself is the value that ecological users earn less.

explore.flashbots.net

Comparison between the sorting methods of Flashbots and Eden

Flashbots have two levels of sorting, bundles and public transactions, and the one that pays the miners is ETH.

Eden has four levels of ranking. The Slot owner is first, and Eden bids for the ownership of the Bundle for a limited time. The Bundle is second, Eden Staker is third, and the public transaction is fourth.

For common users, Flashbots are rarely used. If you need to use single-payment ETH, you can use Flashbots. The usage scenario for most users is to avoid sandwich attacks and enjoy priority packing.

In addition to using some specific Dex applications, setting up private RPC nodes is a straightforward way to solve sandwich attacks. Beta, Taichi, and BloXroute all provide relevant RPCS that are sufficient to solve the problem of ordinary sandwich attacks. However, there is no solution to the sandwich attack by the node RPC owner on the user's transaction.

Eden cannot completely avoid sandwich attack. As an ordinary user of Eden, he or she can pledge 100 or more Eden and access Eden RPC to conduct priority transactions and obtain higher ranking weight of public transactions.

In order to snap up the opening of NFT and IUO, using Flashbots to bid higher than others can be solved, and Eden's Bundle or Slot can also be solved, but the lowest price of Slot is 20000 Eden (about $160,000). While the cost is high for infrequent users, Slot is more suitable for 24-hour on-chain robots. The determining factor in whether the average user can grab NFT is Gas Price.

For deep MEV users, either the owners of some mining pools use their own computing power, or the users of Flashbots, Eden Bundle transactions bribe miners to complete meVs every time they use them.

Value discovery path of Eden Network

It has been proved that MEV track can capture a lot of value, and the head protocols that can solve the problem deserve a high valuation. How to participate in these head protocols has become a problem for investors to think about. The most important reason is the dominance of Flashbots over MEV and the investment threshold, and Flashbots openly stated that the democratic MEV market does not issue tokens, leaving a bunch of institutions and smart investors out of the way.

Eden Network is the predecessor of ArcherDao. It cooperated with KeeprDAO in the mining pool infrastructure in the early stage, but the computation power was low in ArcherDao's era. In early August, Flashbots reached 72% of its power, and ArcherDao announced the brand upgrade, which users with a keen sense of smell noticed even before exchanging coins.

People like the appearance of the Flip, ETH Flip BTC, Sushi Flip Uni, Eden Flip Flashbots, in & NBSP; In ArcherDao's time, they really could not compete with Flashbots. MEV is a race track where computing power is king. Whichever protocol holds most of the computing power is the leader of MEV. In the early stage of Eden, the ratio of computing power and its valuation are lower than that of Flashbots, but Eden's incentives are much higher than that of Flashbots. The assumption that miners pursue profits is established, and Eden's computing power ratio will increase considerably. At that time, Eden's valuation should be reconsidered.

After determining the feasibility of Eden Network's track and the potential growth of the project, Eden's chips and the behaviors of its holders should be analyzed. Through Nansen, Alameda's position can be seen, and the position address and behavior of other institutions (such as 3AC) can be traced back and analyzed. Eden's more holders provided liquidity in Sushiswap at a higher price, which led to the LP mining page on the official website. The APY of that day was 900%. After analyzing Eden's emissions and the output of miners, Eden made a selling operation, and carried out the operation before and after the production reduction to reduce the position cost.

After ARCH 1:1 replaced Eden, a small range of FOMO was caused, and ARCH increased from $1.5 to $5. However, it subsequently fell to $1.70 due to Eden's LP mining emissions, short-term profits, and miners' daily selling pressure. At this time, as a liquidity provider, the institution actually lost a lot of ETH, but gained a lot of Eden rewards.

We continue to analyze the large LP holders of Eden and find that 70% of the liquidity is provided by a few addresses. It is judged that these LPS belong to the community of interests and will not stampede each other. Therefore, we step up the analysis of the addresses with large selling volume and find that the selling pressure mainly comes from miners.

Data by @Grug Capital

In mid-August, AC, the founder's address of YFI, received 600000 Eden. It is speculated that AC's influence will bring more attention to Eden, and Eden's computing power has undergone a qualitative change since its ratio has exceeded 50%, which is also the reason for Eden's subsequent position holding.

Eden Networks & NBSP, September 8; Announce the financing information and complete the $17.4 million financing. At this time, Eden's price is $8-9. At present, Eden's total current market value is about $2 billion, which is probably much higher than the valuation of Flashbots. Therefore, Eden is no longer owned by individuals.

zerion

multicoin.capital/zh/2021/09/08/tokenizing-mev

Voice of the market

When a new thing comes out, there will always be opposition in the market. Sushi was criticized for stealing Uniswap's profit, and Eden was criticized for its emergence.

The biggest winners of Eden are Eden's team and relevant investment institutions, followed by miners who provide computing power, and finally, smart investors in the market. Miners are profit-seeking, they just want to make more money, whether there is a democratic MEV market or who uses MEV is not their concern.

On the way of Eden Network implementation, with the emergence of Greeden-Geth, miners can dynamically switch between Eden and Flashbots to obtain the maximum reward, which is similar to the Matcha aggregate DEX transaction. Geth is aggregated to obtain the maximum benefit for miners.

Voice 1. Robert Miller, the founder of Flashbots, raised questions about Eden's transparency. 50% of the computing power only 5% followed Eden's sorting rules and chose the biggest reward instead of producing Eden blocks when Gas prices were high.

Voice 2. Grug Capital published A Snake in the Garden to analyze whether Eden's incentives increased revenue and whether Eden's mechanism protected users from MEV. The article mentions the mine pool's withholding of miner Eden's reward and the greedy switching of Geth to violate the block rule.

conclusion

The MEV section deserves attention and research, miners, robots pulling users back and forth, institutional capital competition, MEV technology breakthrough, secondary observation are all interesting. The same value discovery path applies to a decentralized derivative track, ETH2 Staking track.

Whether Eden Network has solved the impact of MEV on ordinary users is not important. Eden Network has solved the problem that ordinary investors cannot invest in MEV track. The existing problems will be solved eventually, and the competition between Flashbots and Eden has just begun. Both will exist in the Ethereum ecosystem at the same time, and will encounter a strong competitor in Lido once ETH switches to POS.

Keep an eye on new species in the MEV plate and look for opportunities to participate. I do not hold any of the tokens mentioned herein and do not constitute any investment advice.

References:

Flash Boys 2.0: Frontrunning, Transaction Reordering, The Consensus and Instability in Decentralized Exchanges at https://arxiv.org/abs/1904.05234

A Snake in the Garden https://hackmd.io/fvLQzbwVR-qZizmJvSnjOQ

MEV and me https://paradigm.xyz/2021/02/mev-and-me

MEV auctions considered harmful https://medium.com/@VitalikButerin/i-feel-like-this-post-is-addressing-an-argument-that-isnt-the-actual-argument-that-me v-auction-b3c5e8fc1021