Bankless David's Takes: A Hitchhiker's Guide to Riding an MEV Bot
Aug 17, 2023
Dive into the captivating metaphor of Ethereum as an ocean of liquidity, where innovative off-chain strategies navigate the depths of decentralized finance. Discover how 'Intents' reshape relationships between swappers and MEV bots, fostering collaboration. Explore off-chain signed orders, Dutch auctions, and the unique dynamics of MEV bots in optimizing transactions. The discussion shines a light on the future of cross-chain liquidity and what lies ahead for DeFi trading as it adapts to the evolving landscape.
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Ethereum as an Ocean of Liquidity
- Ethereum is a vast ocean of liquidity where users swap tokens.
- Navigating this ocean requires transactions, like ships crossing the water.
Two Ships: On-Chain vs. Off-Chain
- On-chain dex trades are like tugboats, inefficiently pushing through liquidity, creating large wakes.
- Off-chain signed orders are stealthy yachts, minimizing disruption.
On-Chain Trade Inefficiencies
- On-chain trades require fixed parameters (slippage, route) to protect against MEV, increasing gas costs.
- These parameters are like adding heavy panels to a ship, making it less efficient.