Kevin @Berrey | Sunny @sunnya97
Osmosis Grants Program - Fed @fededaffina
@kado_money - Kado Money
@eco_stake - creator of ReStake
tl;dr
-Sunny’s talk: Osmosis at the cutting edge of MEV
-minor update coming next week to fix spam gauges
-major update with TWAP coming first half of August
-OGP new website! milestone tracking available via https://app.dework.xyz/osmosis-grants-progr
-Kado: fiat onramp, aiming to be available before Sept. 26
-ReStake: authz first adopters received OGP grant to create governance delegation for Osmosis
Sunny at EthCC
-functionalities of appchains (that can’t be done on other chains/apps)
-next day at the Nebular Summit: Osmosis’ approach to MEV
https://www.youtube.com/watch?v=U6ao3_xLYsQ&t=5940s
-threshold: eliminate front-running by encrypting the mempool
-but there is other MEV:
-e.g. liquidations, arbitrage
-prices change in external markets (or internally bt pools)
-being the first to arb this is a form of MEV
-healthy MEV — you want prices to be accurate and in sync; liquidations have to occur
-how do we internalize this to the protocol
-Anatoly (Solana co-founder) tweet:
https://twitter.com/aeyakovenko/status/1531318231163514880?s=20&t=4nVO5-qeJONgtB65r9quzg
-how do we capture this good MEV for Osmosis as protocol revenue?
Kevin: so what exactly is MEV?
Sunny: MEV, miner-extractable value, or better, proposer-extractable value
-block proposers today can choose what goes into a block, and transaction ordering
these inclusion and ordering powers give the power to do many things:
-frontrunning/sandwiching:
-they see your buy, they insert a buy first before yours, then a sell order after your buy, and they get a guaranteed profit, while you get worse execution
-this is bad MEV
-solvable (largely) with an encrypted mempool: bc if no one can read the txs, they are much harder to frontrun
Good MEV: liquidations and arbitrage
-usually there is a reward for triggering liquidations, so there is often a battle to trigger them
-instead, the protocol should auction off the ability to to trigger the auction / i.e. the first-slot rights
Instead of proposer-extractable value, it will became protocol/app-extractable value, and get sent to, e.g., all Osmosis stakers
Kevin: what is a liquidation?
Sunny: when you have a DeFi loan, there is a collateralization ratio — i.e. you put down 100 OSMO to borrow 50 USDC
-if your collateralization ratio goes below a certain percent, someone has to tell the protocol to take the collateral and close the loan (this is healthy)
Sunny: the BeginBlocker can run code at the top of every block
-if it’s cheap (computationally), the Osmosis code can run arbitrage and liquidations
-for more computationally expensive things, the code can run an auction for inclusion in the first block
Back to Feature Development!
—improving test frameworks, simulator, code quality updates has been ongoing for about a month, and we’re happy with where we are