►
From YouTube: One Block, One Batch: Examining the Potential of Frequent Batch Auctions in Ethereum by Anna George
Description
Visit the https://archive.devcon.org/ to gain access to the entire library of Devcon talks with the ease of filtering, playlists, personalized suggestions, decentralized access on Swarm, IPFS and more.
https://archive.devcon.org/archive/watch/6/one-block-one-batch-examining-the-potential-of-frequent-batch-auctions-in-ethereum/
This talk will focus on the future of (de)centralized trading, and examine how frequent batch auctions can revolutionize existing market economics by bringing fairness and protection to Ethereum’s various stakeholders. We will review why Ethereum would benefit from a global batch settlement layer, touching on MEV and unfair pricing of CFMMs.
Speaker(s): Anna George
Skill level: Beginner
Track: Cryptoeconomics
Keywords: P2P,DeFi,MEV
Follow us: https://twitter.com/efdevcon, https://twitter.com/ethereum
Learn more about devcon: https://www.devcon.org/
Learn more about ethereum: https://ethereum.org/
Devcon is the Ethereum conference for developers, researchers, thinkers, and makers.
Devcon 6 was held in Bogotá, Colombia on Oct 11 - 14, 2022.
Devcon is organized and presented by the Ethereum Foundation, with the support of our sponsors. To find out more, please visit https://ethereum.foundation/
A
A
I
should
have
put
Mev
in
my
talk
title
because
we
are
actually
talking
about
Mev
and
I
think
we
would
have
a
higher
attendance
but
anyways,
it's
gonna
be
an
interesting
talk.
I
promise
quit
so
yeah.
The
focus
for
today
is
how
basically
application
design
decisions
can
remove,
or
at
least
reduce
decentralizing
force.
That
Mev
is
placing
on
the
ethereum
blockchain
all
right.
So,
let's
see
and
basically
the
first
part
of
the
talk
we
focus
about
how
and
the
degree
of
centralization
in
proof
of
stake.
A
So
basically
we
look
at
a
few
data
points
telling
us:
how
decentralized
are
we
actually
today
and
then?
The
second
part
we
focus
on
a
more
bright
out
layout
for
ethereum,
where
we
are
heading
and
hopefully
yeah
ways
of
how
we
can
avoid
the
dystopian
future
scenario,
and
that
will
lead
us
to
the
next
part
where
we
will
talk
about
how
specifically,
we
can
make
design
choices
for
applications
to
reduce
mov
and
then
dive
into
car
protocol
as
one
implementation
of
batch
actions
that
basically
facilitate
this
cool.
A
Let's
Dive
Right
In
and
look
at
some
data,
and
so
we
had
to
talk
the
talk
right
before
was
focusing
on
validators
and,
like
he
was
saying
actually
is
that
the
set
of
validators
today
is
quite
centralized
in
a
way
you
have
staking
providers
such
as
Lido,
who
hold
more
than
25
of
the
market,
share,
followed
by
individual
stakers.
But
then
already
you
have
decentralized
exchanges,
coinbase,
current
and
buyers
who
intuitive
combined
also
make
up
more
than
25
percent
of
the
entire
validator
set
on
ethereum
today.
A
So
you
can
say
if
you
have
already
some
degree
of
centralization
in
ethereum
today,
but
of
course
now
with
Mev,
you
add
additional
risk
of
decentralization
growing
further
right,
like
Mev.
Why
is
that
helping
Central
like
why
is
Mev
causing
centralization
is
because
people
are
like
validators
that
have
the
chance
of
proposing
the
next
block.
They
can
move
transactions
around
in
a
way
that
they
are
able
to
extract
additional
value
out
of
it.
A
In
this
way,
they're
actually
able
to
read
more
Rewards
from
the
blocks
than
anyone
else
would
be
able
to
do,
and
this
way
they
grow
their
pie
more
and
more.
Over
time-
and
this
was
already
bet-
this
already
existed
in
in
proof
of
work,
but
now
proof
of
stake-
this
was
accelerated
because
now
you
also
have
the
downside,
basically
that
you
know
in
advance
who
are
the
next
set
of
validators.
So
you
can
have
more
sophisticated
Mev
attacks
that
involve
multiple
blocks
and
even
are
taking
place
across
multiple
blockchains.
A
The
response
to
that
is
PBS
The,
Proposal,
Builder
separation
and
where,
basically,
you
now
divide
the
tasks
of
the
of
the
validator
into
two.
You
have
the
black
proposal
and
the
block
Builder,
and
now
the
block
Builder
is
basically
competing
against
each
other
and
the
one
that
is
able
to
extract
most
values,
winning
the
competition
because
they
are
basically
yeah
bidding
against
each
other
and
the
one
who's
able
to
pay
the
most
to
the
validator
is
the
one
who's
picked.
A
So
you
might
say
that
basically
now
PBS
is
helpful
to
move
the
responsibility
like
to
move
the
centralization
away
from
the
validators
to
the
block
Builders.
But
now,
actually
this
is
problematic,
because
now
we
have
more
centralizing
force
on
the
Block
builders.
You
can
even
enter
a
scenario
where,
basically
more
than
60
percent
or
even
more
more
than
90
percent
of
all
blocks
are
created
by
one
single
block
Builder,
and
this
can
even
be
accelerated
if
they,
for
example,
would
have
access
to
private
order
flow.
A
So
if
now
you
would
have
a
wallet
such
as
metamask
who
decide
my
transactions
to
to
a
single
block.
Builder,
then
the
single
block
Builder
would
have
additional
advantages
over
the
other
block
Builders
and
would
more
reliably
be
able
to
win
this
Blackberry
competition
and
gain
more
and
more
share
of
the
network.
A
Okay,
now,
let's
actually
get
to
the
interesting
point
and
look
at
some
data.
So
here
you
see
basically
how
much
Mev
has
been
extracted.
145
000
blocks
before
the
merge
and
after
the
merge-
and
this
is
roughly
equal
to
20.1
days
and
basically
I
mean
proof
of
Stack-
has
only
been
live
for
not
even
four
weeks
at
this
point,
and
if
you
look
at
this
data,
it
almost
looks
like
we
are
extracting
less
Mev
right
now
than
we
did
before
the
merge.
A
It's
interesting
right.
But
what
is
the
conclusion?
Why
is
this
the
case?
Now?
If
we
look
at
this
slide,
we
basically
zoom
into
one
specific
kind
of
Meb
sandwich
attacks,
and
we
can
look
basically
that
it's
starting,
it's
showing
the
the
first
20
days
of
Sandwich
attacks
on
proof
of
stake,
and
you
can
see
basically
that
the
amount
of
value
extracted
where
this
attack
is
growing
right.
A
So,
basically,
at
the
beginning,
when
we
move
from
proof
of
work
of
proof
of
stake,
we
had
one
short
period
of
time
where
less
Mev
was
extracted,
but
now
over
time
we
are
getting
back
to
the
same
stage
as
we
did
before
and
now
here.
What
we
see
here,
it's
basically
a
chart
that
is
showing
the
adoption
of
math
boost
and
math
boost
is
the
protocol
created
by
the
flashbots
team
that
allows
for
this
proposal.
Builder
separation
that
allows
for
this
block,
Builder
competition
and
the
interesting
part,
is
that
basically
they
correlate
right.
A
A
A
A
So
if
flashbot
says
83
market
share
of
50
market
share,
basically
of
those
that
are
being
integrated
by
validators.
This
means
that
today,
already
more
more
than
40
percent
of
all
blocks
on
ethereum
at
censoring
transactions
that
censoring
the
accounts
that
have
previously
interacted
with
tornado
cash.
Now
we
Zoom
one
level
further
and
look
at
the
Block
builders,
so
who
is
actually
Behind
These
block
builders-
and
here
you
see.
A
Basically
this
is
an
entire
overview
of
all
the
block
Builders
today,
operating
with
any
of
the
relayers
in
PBS,
and
you
see
that
the
top
two
have
more
than
50
market
share.
That
means,
if,
basically,
you
have
50
adoption
of
math
boost
and
within
math
boost.
50
of
blocks
are
created
by
two
players
that
encoder
of
all
the
existing
blocks
that
are
today
created
in
ethereum.
25
of
them
are
created
by
two
single
individual
block
builders
and
then
just
adding
again
the
argument
that
I
mentioned
at
the
beginning.
A
Basically,
if
you
have
private
order
flow
of
masks
or
anyone
else
is
deciding
to
sell
their
order
flow
to
this
one,
individual
block
Builder,
you
have
very
fast
and
accelerated
centralization,
Force,
even
more
like
you
have
these.
These
Blackboard
has
been
even
more
market
share,
and
suddenly
this
dystopian
future
scenario
of
where
ethereum,
hopefully
is
not
heading
towards
suddenly
doesn't
seem
so
unlikely
anymore.
A
Already
today,
you
have
two
block
Builders
having
25
market
share
and
they
can
easily
grow
this
very
quickly.
Okay,
that
was
like
the
negative
side
of
the
talk.
That's
now
focused
more
on,
like
the
hopefully
my
YouTube
utopian
future,
where
we
are
heading
in
ethereum
and
for
this
let's
have
a
look
at
a
quote
that
vitalik
said
earlier
this
year.
So
what
is
his
vision
for
ECM
right
like?
A
So,
let's
move
it
to
the
block
Builders,
but
now
the
block
Builders
are
centralizing.
So
where
do
we
move
this?
And
we
need
to
find
a
way
to
avoid
this?
We
have
to
have
a
better
structured
way
of
protecting
the
ethereum
core
protocol
and
what
is
what
vitalik
said
himself
is
basically
The.
Way
Forward
is
that
these
risks
that
need
to
be
absorbed
elsewhere,
they
need
to
be
absorbed
either
by
layer,
twos
or
by
the
applications
themselves.
A
Here
we
have
another
quote
by
Stefan
the
co-founder
of
flashbots,
who
actually
last
week,
announced
that
he's
leaving
the
team,
because
he
does
not
agree
with
its
centering
that
flashbots
is
doing
today,
and
he
is
also
stressing
the
point
that
the
right
way
of
dealing
with
MVB
is
not
to
basically
try
to
extract
it
and
then
sell
it
or
like
distribute
it.
But
the
right
way
is
to
create
applications
that
don't
extract
the
value
in
the
first
place.
A
And
this
leads
us
basically
to
the
next
part
of
the
talk
where
we
will
look
at.
How
can
we
design
applications
in
this
way
that
they
are
not
exposing
Mev?
To
do
that,
we
first
have
to
understand
where
Mev
is
actually
coming
from
like
right
like
why.
Why
do
we
have
this?
We
need
to
understand
where
it's
coming
from.
A
In
order
to
be
able
to
avoid
it,
we
basically
believe-
or
it's
pretty
clear,
actually
that
one
of
the
reasons
or
like
the
main
reason
why
mov
exists
today,
is
that
within
a
single
ethereum
block,
you
have
multiple
different
token
prices
for
a
single
individual
asset.
So
if
you
use
the
example
of
decentralized
trading,
for
example,
yeah
you
can
have
a
Blog
where
five
people
all
want
to
sell
usdc.
A
A
They
move
the
price
again
and
because
of
that,
they
basically
create
incentives
for
other
players
to
jump
in
move
their
transactions
around
Place,
additional
transactions
in
front
and
after
them
to
extract
value
from
these
users
and
to
give
a
more
concrete
example
of
a
real
block.
This
was
like
six
days
old.
A
A
Then
we
would
actually
be
able
to
even
offer
them
better
prices,
because
we
wouldn't
have
to
move
the
price
on
a
price
curve
up
and
down
up
up
and
down,
but
we
would
actually
be
able
to
not
have
this
much
price
impact
and
have
additional
value
that
we
could
give
back
to
the
users.
And
in
this
concrete
example,
it
would
be
930,
US
dollar,
that
we
could
additionally
pay
out
to
the
users.
A
We
are
batching
trades
together
and
what
happens
is
that
basically
users
on
Kyle's
web
or
car
protocol,
they
go
to
our
UI
and
then
assign
messages
they
sign
and
intend
to
trade,
and
this
is
actually
really
important
right
like
because
they
sign
a
message
and
they
don't
just
execute
and
they
don't
just
sign
a
transaction
on
ECR.
This
gives
us
more
flexibility.
What
to
do
with
these
transactions.
We
are
actually
then
able
to
to
match
them
together.
So
we
collect
all
these
orders
in
our
off-chain
order
book,
and
then
we
have
a
competition.
A
We
have
a
competition
of
so-called
cow
batch
builders
that
basically
look
at
what
are
the
transactions
that
currently
exist
in
our
off-chain
order
book
and
try
to
find
the
best
possible
way
of
matching
them
together
with
by
finding
a
unique
clearing
price
for
all
these
trades
and
then
the
winning
cow
batch
Builder
is
the
one
that
would
settle
these
trades
on
chain
and
what
is
to
be
highlighted
here
is
that
it
looks
maybe
on
High
level,
it
looks
very
similar
to
The
Block
Builder
competition,
but
it's
very
different.
It's
quite
the
opposite.
A
A
But
on
cow,
swap
you
maximize
the
value
for
the
users,
the
bug
Builder,
the
batch
Builder
that
is
able
to
find
the
best
possible
prices
for
our
users
is
the
one
that
would
win
the
competition,
and
this
is
enforced
by
the
objective
function
that
we
are
using.
The
batch
Builder
that
is
maximizing
most
the
utility
for
the
users
is
the
one
that
wins
the
competition
all
right.
So
how?
How
does
this
work?
How
do
we
keep
our
cow
batch?
Builders,
honest?
A
A
A
A
We
were
able
to
save
fifteen
hundred
dollars
for
users,
and
also
we
were
able
to
save
on
protocol
fees
for
the
users,
an
additional
800
that
didn't
have
to
be
paid
to
the
amm
cool,
and
that
basically
leads
me
already
to
the
final
slide
of
my
talk.
So
our
vision
is
to
protect
the
users
and
our
vision
is
to
protect
the
ethereum
core
protocol
against
the
negative
centralizing
externalities
of
Mev.
A
A
But
the
real
argument
here
that
I
want
to
make
is
that,
even
if
our
our
batch
is
not
placed
first
in
a
block
by
growing
our
share,
we
are
basically
reducing
the
total
amount
of
Mev
transactions
in
a
block,
and
this
means,
in
other
words,
growing.
The
share
of
cow
protocol
means,
at
the
same
time
reducing
the
share
of
Mev.
Thank
you.
Everyone.
A
That's
so
we
basically
maybe
can
I
go
back
in
my
slides
just
to
make
this
point
clear.
Is
that
possible
so
so,
okay,
otherwise
I
can
explain
it.
But
basically
we
had
this
one
slide
where
you
could
see
that
the
value
chain
of
a
transaction
from
it's
being
placed
and
it's
being
executed
on
chain.
So
basically.
D
A
Basically,
car
protocol-
that
is
the
application
on
top
and
what
we
do
is
we
collect
the
user
orders
and
we
collect
them
they're
signing
and
tends
to
trade.
So
we
collect
them
off
chain
in
an
off-chain
order,
and
then
we
have
the
cow
Builder
competition
and
they,
basically
they
have
their
own
set.
They
have
their
own
rule
set
and
their
own
competition
rules
right
and
that
it
is
completely
separate
from
the
black
Builder
competition.
A
So
someone
who
is
participating
on
a
car
batch
Builder
competition-
they
basically
they
they
know
if
they
participate,
they
only
get
rewarded.
They
only
win
if
they're
maxing
maximizing
value
for
the
user,
but
this
is
orthogonal
orthogonal
to
to
the
block
beta
competition
and
on
ethereum
that
happens
at
a
later
stage.
So
right
like
the
cow
batch
Builders,
they
find
they
find
the
perfect
solution.
They
then
submit
them
on
chain
and
on
chain.
They
can
actually
decide
how
they
want
to
submit.
This
is
up
to
the
to
the
batch
Builders.
A
They
can
either
submit
them
directly
to
the
to
the
public
mempool
or
they
can
submit
them
via
a
relayer
if
they
decide
that
they
want
to
additionally
protect
themselves
against
Mev.
However,
basically
at
this
point
in
the
execution,
if
they're
being
front-enders
and
which
this
is
actually
something
that
the
block
Builders
the
sorry
the
batch
Builders
have
to
pay
for.
So
at
this
point
the
user
is
already
protected
by
the
the
price
that
the
cow
batch
Builder
promised.
So
the
car
batch
Builder
wins.
A
E
Hey
thank
you
for
laying
out
the
problem
with
L1
right
now,
in
terms
of
maybe
the
very
nice
slides,
I'm
curious
about
how
you
moving
this
problem
into
the
application
layer,
how
you
deal
with
censorship,
resistance
problems
in
the
off-chain
order
books
specifically
so
today,
if
I
go
to
the
Cal
swap
website
and
I,
make
a
transaction
like
how
do
I
know
I'm
not
going
to
be
censored
by
the
cow
swap
like
company
or
whoever
runs
this
protocol.
Yes,.
A
No,
that's
a
very
good
question.
It's
basically
something
that
we're
working
on.
We
still
have
some
centralizing
facts.
I
have
components
in
the
in
in
cow
protocol
that
essentially,
basically,
this
is
right.
Now
we
have
this
option
order
book
that
is
hosted
by
us,
but
the
idea
is
that
in
the
future
this
will
be
decentralized
and
not
host
the
bias
anymore
and
yeah.
But
basically
this
is
the
answer.
It's
like
it's
a
it's
a
it's
an
ongoing
process
where
we
have
to
decentralize
more
and
more
of
the
components.
F
B
F
Question
is
when
you're
trying
to
remove
the
meth
in
the
blocks
by
cutting
these
batch
balls
in
between.
How
is
then,
how
is
it
then
still
attractive
from
a
builder
perspective,
since
here
it
has
less
map
in
the
block.
Now,
how
can
you
still
win
the
bid
auction
and
then
how
you
make
sure
that
the
block
gets
actually
proposed.
A
So
I
mean
right
now,
usually
not
a
hundred
percent
of
these
transactions
in
a
blogger,
Mev
transaction
right.
So
basically
you
would
even
if
you're,
not
the
first
in
the
block,
you
could
still
ensure
that
you're
part
of
it
but
I
think
one
interesting
point
that
where
we
could
get
it
is
by
the
more
order
flow.
A
We
are
actually
processing
the
more
Surplus
we
are
generating
right
like
this
was
the
point
on
like
this
one
slide
over
here,
where
we
have
this
like
real
example
of
creating
an
additional
two
thousand
three
hundred
dollars
in
Surplus.
So
what
we
could
do
is,
for
example,
if
we
would,
if
we
are
creating
this
much
more
value
for
users,
we
could
take
a
percentage
cut
of
this
if
it
was
needed
in
the
future
to
pay
block
Builders
to
guarantee
execution
in
a
block.