The Power and Pitfalls of Incentives in DeFi Protocols

Eugene Chen joins us to discuss why Solana's local fee markets aren't real. Well, they are real, but they don't yet work as advertised. Eugene is the co-founder of Ellipses Labs, Phoenix Protocol, and Umbra Research and he is one of the sharpest builders in Solana! In this episode, we discuss how Solana transactions work, how to improve Solana's fee markets, MEV on Solana, how apps can accrue their own MEV, Solana's DeFi risk, Phoenix's limit order book and more!

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Timestamps

(00:00) Introduction

(00:56) How Solana Transactions Work

(05:56) Solana’s Local Fee Markets Aren't Real

(29:53) Access Promo

(30:55) DAS Promo

(31:52) MEV on Solana

(36:59) App-Specific MEV and Value Accrual

(41:46) Solana Bots and Toxic MEV

(45:27) The Latency vs “Fair” Distribution of MEV Tradeoff

(48:41) Solana DeFi Risk and the mSOL depeg

(51:18) Why App Developers Should Understand the Infrastructure

(55:19) Ellipses Labs, Phoenix’s LOB and Points

(01:01:48) Solana’s Identity and Advice for Solana Builders

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Resources

Ellipsis Labs

https://twitter.com/ellipsis_labs

https://ellipsislabs.xyz/

Phoenix

https://twitter.com/PhoenixTrade

https://www.phoenix.trade/

Umbra Research

https://www.umbraresearch.xyz/writings

https://twitter.com/UmbraResearch

Solana Fees, Part 1 (Solana Local Fee Markets Aren't Real)

https://www.umbraresearch.xyz/writings

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Disclaimers:

Lightspeed was kickstarted by a grant from the Solana Foundation.

Nothing said on Lightspeed is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Mert, Garrett and our guests may hold positions in the companies, funds, or projects discussed.