Bell Curve

A Deep Dive into Batch Auctions | Season 6 Episode 5

Nov 14, 2023

Anna, co-founder of CowSwap, and Ludwig, Founder of Sorella Labs, join the podcast to discuss batch auctions. They explore how CowSwap utilizes batch auctions and how Sorella Labs addresses LVR for sustainable liquidity. The guests also discuss app layer innovation, MEV-conscious design, and the potential for decentralized price discovery. A deep dive into the world of batch auctions and liquidity enhancement in decentralized exchanges.

01:16:58

Episode guests

Anna

Ludwig

AI Summary

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Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Batch auctions, implemented by platforms like Cowswap and Angstrom, offer a solution to mitigate MEV (Miner Extractable Value) in decentralized exchanges by redirecting value back to users and liquidity providers.

Designing mechanisms at the application layer that redirect value extracted by proposers or builders back to liquidity providers (LPs) is crucial to prevent LP arbitrage and promote decentralized competition.

Leveraging the Uniswap brand and network effects through building as a hook on Uniswap v4 can provide innovative clearance of trades, value to LPs, and gas efficiency without significant technical or efficiency barriers.

Deep dives

Batch Auctions in Cowswap and Angstrom

The podcast episode discusses the concept of batch auctions as a solution to mitigate MEV (Miner Extractable Value) in decentralized exchanges. Cowswap and Angstrom are highlighted as examples of platforms implementing batch auctions. Cowswap is a decentralized exchange based on frequent batch auctions, allowing users to sign transactions that are collected in an order book. Servers then compete to maximize the value given back to users. Angstrom, a liquidity tool suite built around an innovative AMM, addresses the loss versus rebalancing issue for LPs by redirecting value back to them through a batch auction mechanism. The episode explores the challenges of MEV in decentralized finance and the importance of designing mechanisms that are MEV aware.

Introduction

4min

Batch Auctions and MEV Mitigation

14min

Designing Blockchain Systems to Benefit Users and Redistribute Miner Extractable Value

5min

Analysis of Actors and Competition in Batch Auctions

14min

Discussion on Auction Synchronization, Swapper Profile, and Arbitrage Volume on Uniswap

3min

Liquidity requirements and future changes

19min

MEV and its Impact on Builders

19min

Season 6 | Episode 5

In this episode of Bell Curve we dive into the world of batch auctions with special guests Anna, co-founder of CowSwap, and Ludwig, Founder of Sorella Labs. The team digs into how Cowswap's innovative batch auctions function and how Sorella Labs' Angstrom project tackles LVR for sustainable liquidity. They unpack how app layer innovation and MEV-conscious design can mitigate value extraction. To close out they discusses whether price discovery will ever move from centralized to decentralized exchanges and what prerequisites are necessary for that to happen. Enjoy!

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Timestamps:

(0:00) Interview Start: Anna & Ludwig

(4:47) What are Frequent Batch Auctions?

(10:50) MEV by Passive LPs

(15:42) Mechanism Design Avoiding MEV

(21:20) DAS London Ad

(22:29) Who are Solvers & their role in CoWSwap

(29:40) How Angstrom Solves DEX MEV

(33:06) CoW Hooks

(38:18) Maverick Ad

(39:33) Will Passive Liquidity Stay?

(46:38) Why is Angstrom a Uniswap Hook?

(52:07) Will Price Discovery Come Onchain?

(58:47) Outro

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Follow Dan: https://twitter.com/danrobinson

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Follow Ludwig: https://twitter.com/0xvanbeethoven

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Resources:

https://twitter.com/Sorellalabs

https://twitter.com/CoWSwap

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Disclaimer: Nothing said on Bell Curve 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. Mike, Jason, Michael, Vance and our guests may hold positions in the companies, funds, or projects discussed.

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Bell Curve

A Deep Dive into Batch Auctions | Season 6 Episode 5

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Batch Auctions in Cowswap and Angstrom

Design Considerations for Solving MEV

Advantages of Hooks on Uniswap v4

The Future of Passive On-Chain Liquidity

The importance of solving transaction cancellation problem

The challenges of achieving price discovery and solutions

Remember Everything You Learn from Podcasts