►
From YouTube: The Fight for MEV by Alex Vinyas | Devcon Bogotá
Description
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https://archive.devcon.org/archive/watch/6/the-fight-for-mev/
The Fight for MEV is a talk that focuses on the two most "famous" MEV solutions designs, CowSwap and Flashbots. It will go over the differences in how each model is designed, and why each solution has made those choices (users, objectives). We will end on how we see the future at CowSwap in relation to the merge, MEV, and the overall Ethereum DeFi ecosystem.
Speaker(s): Alex Vinyas
Skill level: Intermediate
Track: Cryptoeconomics
Keywords: MEV,Auction,DeFi
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
B
So
hello,
everyone
excited
to
be
here
talking
today
on
the
patreon
of
Zaragoza,
which
is
Pila
and
I'm
Alex
vinas
I'm,
a
marketing
manager
and
cow
protocol,
and
today
I'm,
going
to
talk
to
you
about
how
does
cloud
protocol
reduce
Meb
by
optimizing
transactions
through
patch
auctions,
I've
broken
down
the
talk
into
four
topics,
which
is
the
first
one
Meb
The
Good
the
balance,
the
ugly
then
what
is
called
protocol
then
the
difference
in
the
mindsets
of
maximization
versus
minimization.
And
lastly,
where
are
we
heading?
B
B
So
first,
let's
try
to
Define
what
is
Meb,
and
maybe
it
was
first
coined
as
minor
extractable
value,
but
now
has
been
recoined
as
maximum
extractable
value
and
maximally.
Extractable
value
is
this
hidden
power
that
the
block
producers
have
and
what
this
hidden
power
allows
them
to
do?
Is
the
ability
to
arbitrarily
include
exclude
or
reorder
any
transaction
in
the
block?
B
But
in
reality,
where
does
Mev
come
from
now.
Mev
comes
from
two
ways
from
either
the
execution
layer
and
the
application
layer
in
the
actual
education
layer.
It
comes
from
the
fact
that,
as
we
just
saw
that
the
block
producers
have
this
sort
of
hidden
power
towards
the
transactions
in
the
wrong
wheel
and
basically
like,
as
we
all
know
and
we've
seen,
data
shows
that
they're
constantly
doing
this,
but
not
only
that.
B
And
lastly,
what
is
truly
like
a
little
bit.
The
nonsense
in
here
is
that,
even
though
the
transactions
are
truly
atomically
atomically
happening
in
ethereum,
the
prices
are
not.
We
often
see
that
we
have
blocks
that
have
multiple
transactions
and
they're
happening
atomically
at
the
same
time.
But
if
you
kind
of
look
carefully
at
the
data,
you
can
see
that
there's
a
price
disparity
with
the
same
token
Pairs
and
even
in
the
same
token,
and
even
in
the
same
trading
venue.
B
This
is
a
video
of
a
big
issue
in
finance,
because
it's
very
nonsense
that
the
transactions
are
happening
at
the
same
time,
but
the
prices
are
completely
different
and
now
that
we
know
the
definition-
and
we
know
where
Mev
comes
from-
let's
see
what
you
can
do
with
the
power
of
inserting
transactions
at
your
own
will.
So
there
are
three
main
forms
of
attack
in
mov,
they're
well
known.
B
The
first
one
is
front
running
and
basically
from
running,
consists
of
any
transaction
that
has
any
sort
of
value
such
as
like
a
Liquidation
on
our
Arbitrage,
we'll
go
from
I,
get
it
to
basically
the
block
producer
get
it,
and
they
do
that
because
they
have
the
power
to
insert
the
transaction
wherever
they
want.
But
not
only
that.
B
Now,
why
are?
Why
are
these
numbers
of
programs?
These
numbers
are
a
problem
because,
if
ethereum
truly
wants
to
become
the
world
com
the
world
computer,
due
to
its
ability
to
settle
transactions
in
a
decentralized
open
in
an
atomic
manner,
we
need
to
try
to
fix
Mev
and
we
need
to
try
to
fix
Mev,
because
I
think
we
all
want
to
and
believe
that
ethereum
will
indeed
become
the
world
computer
and
absorb
the
all
the
transaction
value
of
the
world.
B
The
market
we've
already
seen
that
in
several
reports
from
the
bank
of
international
settlements,
how
they
try
to
establish
like
whether
a
front
running
or
sandwiching
is
illegal
activity,
or
even
more,
particularly
in
in
Europe,
where
I'm
from,
and
we
can
already
see
this
in
the
Mika
regulation.
That
current,
like
the
current
forms
of
from
running
or
sandwich
attacks,
will
be
deemed
illegal
under
the
asthma
Market
structures.
This,
of
course,
is
a
problem
because
I
think
we
all
believe
we.
B
We
also
want
to
have
The
Regulators
to
come
in
and
dictate
how
the
market
should
run,
but
rather
we
want
to
just
build
Technical
Solutions
that
like
address
this
problem,
so
that
the
regulator
doesn't
have
to
step
in
and
kind
of,
like
ruin
the
party.
So
what
is
come.
Protocol
Cloud
protocol
is
the
trading
mechanism
that
underpins
hopefully
now
the
famous
UI
culture
of
Exchange
and
it's
similar
to
an
amm
or
a
aggregator,
but
with
the
fundamental
response
difference
that
we
add
a
theme
matching
layer
on
top
of
them.
B
B
Batching
also
allows
us
to
be
the
sort
of
metadex
aggregator
similar
to
scanner
to
Skyscanner.
We
can
query
all
the
amms
or
all
the
liquidity
on
chain
as
well,
the
all
the
other
aggregators,
so
that
in
a
sense,
your
kind
of
baseline's
price
is
always
going
to
be
the
price
that
the
amm
or
the
aggregator
gives
you,
but
because
patching
offers
certain
benefits
we
on
like.
We
almost
always
improve
it.
B
Then
it
also
offers
Med
protection,
because
the
one
of
the
key
reasons
for
batching
is
that
the
batch
executors
have
to
guarantee
the
price
that
you
get
so
either
you
get
your
price
or
your.
Your
trade
is
not
going
to
go
through
and
those
you're
not
going
to
be
faced
with
failed
transactions
and,
lastly,
for
all
the
if
Maxes
that
we're
all
here,
it
also
allows
us
to
do
gustless
swaps,
which
basically
allows
you
to
pay
the
gas
fees
in
your
cell
token,
and
you
don't
need
to
if
actually
for
trading
on
on
cow
shop.
B
So
how
do
we
actually
reduce
the
Mev
on
chain
through
batch
actions?
Well,
the
goal
is
that
through
batch
auctions,
we
want
to
reduce
the
overall
interactions
with
me,
amms,
and
if
we
have
to
go
to
amms,
then
at
least
we're
going
to
try
to
diminish
the
level
of
exposures
that
and
that
the
trades
are
going
to
have
against
Mev
by
applying
certain
rules
to
the
batch
auctions.
B
The
main
way
to
actually
reduce
mevs,
as
we
just
saw,
is
executing
Coincidence
of
ones
and
because
you
don't
need
to
trade
against
a
liquidity
pool
and
the
trades
are
much
completely
peer-to-peer.
Therefore,
there
is
no
matter
in
the
order
of
those
transactions,
because
it's
a
pure,
simple
transfer
between
two
parties
and-
and
there
is
nothing
like
no
one-
can
get
in
the
middle,
then
second,
the.
B
B
So
in
the
first
one
it
would
be
like
in
the
in
the
oh
sorry
in
the
in
the
top.
Now
we
have
die
against
Aura
and
they
actually,
the
liquidity
for
the
first
one.
That's
selling
die
goes
to
the
other
one,
that's
trying
to
buy
usdt
and
so
on
and
like
we
make
a
circle,
now
use
the
C,
USD
and
USBC
against
aura.
B
Now,
how
do
we
actually
compete
for
Mev
Mev
minimization?
How
protocol
outsources
the
settlement
of
dispatch
options
to
a
competition
of
third-party
algorithms?
Whoever
gives
whoever
whatever
algorithm,
gives
the
best
price
Improvement
for
them
for
the
user
and
thus
that
minimizes
Mev
the
most
is
the
one
that
actually
wins
the
right
to
settle
the
to
settle
the
watch
action,
not
only
they
win
the
right
to
settle
the
batch
auction,
but
it
also
gets
rewarded
for
doing
so.
B
Currently
right
now,
there
are
12
different
solvers
competing
against
each
other
for
kind
of
like
minimizing
the
amount
of
Mev
or,
in
other
words,
maximizing
the
value
for
the
users,
and
they
can
be
grouped
into
four
different
types
of
solvers.
We
will
have
single
order
servers
that
basically
specialize
on
just
settling
one
order
in
a
box.
Then
we
will
have
patch
countdex
aggregator
solvers
that
specialize
on
finding
this
Coincidence
of
ones
amongst
users.
B
Then
we
will
have
a
mixed
integer
programming,
solvers,
which
kind
of
are
able
to
settle
multiple
trades
against,
like
uni,
swap
B2
or
unusual
P3
style
kind
of
pool.
And
lastly,
we
will
have
the
quasi-linear,
solver
or
quasi
model
that
specialize
in
settling
trades
of
the
batch
auctions
in
more
fancy
pools
like
balancer.
B
So
what
are
the
difference
between
the
maximization
and
minimization?
Mindsets
is
really
mov
protection.
That
is
all
there
may
be
protection
out
there.
The
same
thing
well,
of
course,
not,
although
one
can
argue
that,
in
my
opinion,
no
flash
was
technology
and
corporate
protocol
technology
are
kind
of
two
sides
of
the
same
coin.
B
So
whether
flashback
goes
and
and
Mission
well,
flashbacks
is
a
collective
group
of
individuals
that
have
done
a
lot
of
work
in
kind
of
like
highlighting
the
issues
of
Mev
in
the
space
and
kind
of
educate,
a
lot
of
people
and
and
make
us
realize
what
are
the
consequences
of
building
systems
that
are
prone
to
Mev,
but
from
their
website.
You
can
take
that
their
goals
is
divided
into
three
steps.
B
The
first
one
is
to
illuminate
the
Dark
Forest
and
they've
done
so
via
Mev
aspect
or
Mev
Explorer,
and
basically
this
helps
educate
a
lot
of
people
within
the
ethereum
community.
By
putting
a
number
and
seeing
how
hurtful
MAV
is
the
second
one
is
democratized
instruction
before
mebkf
or
Mev
boost.
The
extraction
was
only
available
to
a
very
few
amount
set
of
players,
but
now,
with
the
democratization
of
their
tool,
a
lot
more
people
can
do
it.
And
while
it's
good,
there
are
a
lot
more
people
can
actually
like
you
know,
do
extraction.
B
B
But
right
now
one
can
say
that,
like
the
redistributing
the
benefits
to
the
wrong
people,
because
the
benefits
right
now
that
are
coming
from
Mev
extraction
are
going
to
the
validators,
which
are
not
the
ones
that
are
creating
the
opportunities
because,
in
the
end,
the
opportunities
are
created
by
the
Traders
are
created
by
the
Traders
yeah.
So
what
are
Cloud
protocols,
goals
and
missions?
Well,
how
protocol
goal
is
to
actually
achieve
one
single
price
per
token
per
vast
and
we
want
to
try
to
achieve
that
by
basically
executing
one
batch
settlement
per
every
block.
B
But
if
we
are
to
compare
as
well
into
three
main
points,
we
will
have
that
the
first
one
is
protection
from
the
Dark
Forest,
and
basically
we
do
this
by
executing
The
Coincidence
of
ones
where
the
user
doesn't
have
to
go
against
the
liquidity
pool
and
also
through
a
delegating
trading
model
execution
where
the
user
doesn't
set
in
the
transaction
directly
to
the
mempool,
but
rather
sends
it
to
an
offset
an
off-chain
set
of
relayers.
That
will
be
the
ones
that
kind
of
like
handle
how
they
they
transactions
hits
the
man
pool.
B
Then
the
second
one
is
if
we
have
to
go
to
the
amms
and
if
we
have
to
go
to
the
mempool,
we
try
to
avoid
extraction
by
enforcing
certain
rules
to
dispatch
actions
and
the
most
important.
The
most
important
rule
is
the
uniform
cleaning
prices
which,
in
the
end,
breaks
the
order,
dependency
and
thus
makes
those
trades
much
more
or
less
uneviable
and,
lastly,
distribute
the
benefits
if
you're
trading
on
Costa
parade.
B
But
to
sum
it
up,
how
are
they
different?
No
in
the
case
of
cow
protocol
technology,
if
we
look
at
the
key
metric
that
evaluates
the
success
of
the
technology,
is
the
overall
reduction
or
overall
reduction
of
the
exposure
of
Mev
versus
in
the
case
of
flashback
technology?
The
key
metric
is
how
much
Mev
is
being
extracted.
B
And
if
we
had
to
look
at
how
these
two
different
Technologies
interact
with
on
chain
the
goal
of
cow
protocol,
Technologies
kind
of
reduce
the
amount
of
amm
interactions
that
the
users
have
because
in
the
end
like
amms,
are
the
reason
that
the
Mev
exists.
But
in
the
case
of
car,
in
the
case
of
flashbots,
they
want
to
maximize
the
amount
of
MMA
interactions.
Because
these
ways
they
can
maximize
the
slippage.
Tolerance
from
your
trades
and
kind
of
extract,
the
most
value
from
you.
B
And
lastly,
if
we
look
at
how
both
systems
kind
of
like
play
by
the
rules
in
the
case
of
cup
protocol,
we
see
that
the
the
more
money
to
the
users,
the
less
mov
and
the
higher
the
chances
you
have
for
winning
and
the
right
to
settle
the
batch
and,
in
the
case
of
of
flashbots,
the
more
money
that
goes
to
the
validators.
The
less
money
that
goes
to
the
user
and
therefore
the
more
Mev
the
higher
the
chances
you
have
of
winning.
B
B
So
what
is
the
future
of
of
the
access?
We
believe
that
the
future
of
Texas
is
one
that
focuses
on
fairness
and
cost
Improvement
for
him
for
the
users,
rather
than
just
let
them
trade
in
kind
of
like
some
optimal
ways.
It
is
one
also
that
offers
Mev
protections
because,
as
we
said
before,
if
the
transaction
value
in
ethereum
is
going
to
increase
me,
protection
is
going
to
become
more
and
more
important.
It
does
it's
also
one
that
puts
the
users
at
the
center
of
it.
B
Now,
in
the
end,
in
our
system,
the
users
are
the
monarchs
because
they
are
the
ones
that
are
creating
the
opportunities
for
different
price
improvements,
so
they
they
are
the
ones
that
should
actually
be
rewarded
for
it
and
not
other
parties
in
the
system.
And
lastly,
it's
one
that
abstracts
users
from
complicated
technology.
It
is
unrealistic
to
expect
that
everyone
is
going
to
know
what
is
an
RPC
or
how
to
add
an
RPC
or
even
stay
up
to
date
on
all
the
different
liquidity
pools
to
trade.
B
B
And
lastly,
it
would
be
like
the
combination
of
the
utopian
side
of
the
flashbus
technology
with
cow
protocol.
So
how
does
this
look
like?
Well?
Currently,
we
have
this
this
scenario
right
now
in
ethereum,
where
we
have
the
mempool
and
we
have
the
different
searches
or
private
order
flow
that
submit
their
bundles
to
the
Builder,
and
then
it
goes
to
the
relay
and
end
the
validator.
B
But
for
us
the
key
is
to
kind
of
break
the
the
order
and
kind
of
transform
Searchers
into
Cloud
Builder
and
put
cow
protocol
and
cow
shop
in
the
middle
of
it,
in
a
way
that
if
we
make,
if
we
convince
Builders
to
focus
on
the
utopian
side
and
kind
of
shift,
the
revenue
mindset
from
hurting
users
to
actually
protecting
non-maximizing
to
the
value
of
the
users,
then
we're
gonna
have
a
much
overall,
better
outcome.
Within
ethereum
and
Will
the
Market
fix
Mev.
Well.
B
A
B
Well,
basically,
it's
like
they
see
in
that
like
in
a
way.
Worse
is
that
when
you
go
to
Cloud
shop,
you
sign
a
message
with
your
intent
to
trade,
and
basically
your
your
Baseline
price
is
the
quarter
price
that
we
give
you
so
from
there.
The
solvers
start
working
on
trying
to
improve
the
price
so
you're,
always
at
least
at
base.
You're
gonna
get
what
we
have
showed
you
in
the
UI
and
from
there.
B
If
there
are,
if
there
are
price
improvements
that
the
solvers
can
find
be
a
coincidence
of
one
or
some
sort
of
batching,
then
it's
gonna
be
rewarded
in
the
form
of
surplus
from
you,
so
you're
gonna
get
more
how's
the
color
spray
calculated
by
basically
looking
at
their
own
Chain
by
the
at
the
on-chain
prices
and
from
there
like.
We,
we
discount
the
gas.
C
B
Like
the
way
it
works
is
that
you
sign
a
message:
no
and
then,
if,
if
your
prices
get
out
of
market,
then
the
the
the
trade
is
not
going
to
execute
but
you're
not
going
to
get
it
you're
not
going
to
get
charged
for
a
failed
transaction
or
anything,
because
simply
the
trade
doesn't
execute.
So
in
a
sense
like
the
guarantee
is
that
if
you're,
if
you're,
if
your
order
is
more
or
less
within
the
market,
pricing,
then
within
a
matter
of
30
seconds
to
one
one
minute
is
of
course,
gonna
be
included.
D
D
B
But
what
we
try
to
do
is
kind
of
like
fix
the
Mev
at
the
application
layer,
so
that
then
flashbacks
wouldn't
have
like
a
way
to
extract
Meb.
So
if,
like
you
know
in
the
end,
if,
if
the
servers
kind
of
like
find
the
optimal
prices
and
uniform
clearing
prices,
the
Mev
that
will
go
to
the
Vlog
producers
is
non-existent
because
there's
no
like
it
doesn't
matter
the
order
of
the
transactions.