Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Joey Zacherl: KeeperDAO – The On-Chain Liquidity Underwriter

Episode Date: March 19, 2021

KeeperDao is an on-chain liquidity underwriter for DeFi that combines yield farming and profits single-block arbitrage. The mining pool for Keepers incentivizes a game theory optimal strategy for cooperation among arbitrageurs. Their goal is to capture profit opportunities and distribute them to the various participants involved. We were joined by Joey Zacherl, Co-founder of KeeperDAO, to chat about what the protocol does and its mission, the grim triggering strategy, the ongoing hiding game, and the roadmap for the future.Topics covered in this episode:Joey's background and how he got into cryptoAn overview of VolleyFireWhat KeeperDAO does and its missionHow KeeperDAO users pool funds to to profit from on-chain arbitrage and liquidation opportunitiesThe grim trigger and hiding game strategiesKeeperDAO integrations and gas costsThe KeeperDAO governance roadmapThe ROOK tokenCan keepers carry out malicious attacks?Episode links: KeeperDAOKeeperDAO on MediumThe KeeperDAO whitepaperKeeperDAO on TwitterJoey ZacherlThis episode is hosted by Friederike Ernst & Meher Roy. Show notes and listening options: epicenter.tv/383

This is episode 383. Hello and welcome to Epicenter. I am Friedrich Ernst. I'm Meheroy. And we're here with Joy Zackler today. Joey is the co-founder of Keeperdao, a fascinating new project that describes itself as an on-chain liquidity underwriter for Defi, and we will explore what that means in a bit.

So, Joey, welcome to the show. Can you tell us what we? what you did before you fell into the Web 3 rabbit hole, and then we'll take it from there. Sure, absolutely. Thank you for having me on the show. So I have a background as an engineer, and I just generally enjoy building things. My most recent projects have all involved some form of automation, but I got started doing cybersecurity and a lot of low-level programming and then kind of transitioned more into the user interactive space and building mobile apps. But once I got hooked on automation, there's really been no turning back ever since.

So I've done automation platforms like IOT automation platforms for home automation. I've done a lot of video game bots, online poker bots. And then once I discovered crypto and went down the Ethereum rabbit hole, my kind of automation, you know, went in that direction. And, you know, I was most fascinated with the concept of decentralized trade. from the Mount Gox incident back in 2014. And I feel like those events demonstrated the value of trustless exchange. And it really inspired me to kind of take my automation skills toward decentralized trade

and help facilitate the growing need for, you know, trustless asset exchange. Yeah, that makes total sense. I think coming from the automation word, it's kind of a very seamless transition into Web3. So the first thing you actually did in the Web3 space was Vollifier, which, as I understand it, is a Dex market maker and a smart contract service provider. What drew you to that? So, you know, it really started as my first step into actually building something in the crypto space. You know, I always liked Bitcoin, but there really wasn't anything for me to do with it, you know, early on. And so when Ethereum came around and these decentralized exchange protocols started popping up,

I noticed very quickly that they were extremely powerful, but there was just no liquidity. And, you know, I knew enough about trading to be dangerous. So I kind of went down the rabbit hole of, you know, using my automation skills to start building out some components and, you know, started, you know, sharpening my trading skills. And, you know, before I knew it, within just a few months, I actually had the first, you know, market maker on Ethereum up and running. and it was working really well. And ever since then, I've just been, you know, building out trading integrations, you know, market making, providing liquidity services. And, you know, on one hand, it does well because it, you know, makes money.

But on the other hand, it provides a service and kind of helps, you know, provide that, like, I guess, lifeblood into these systems, you know, because a lot of the early protocols didn't have any liquidity and they failed mainly from that. And maybe some of them may have failed because they were hard to use. but quite a few of them failed because they didn't have any liquidity. And so it's nice to kind of provide that liquidity and kind of be that trading partner for that first user that comes on board on day one, you know, when they trying to find a trading partner and there isn't one. You know, it's good to have that ready to go.

And so I think a big part of that really is just about, you know, having a nice protocol, a nice automation platform that can plug into it. So, you know, you need good APIs. And then you have lots of liquidity requirements to people. want to trade more than just one token, you know. So there's, there's kind of a variety of things that go into making that work. And that's, that's basically how Volleyfire came about. And today, you know, flash forward to 2021. So a lot has changed. There's a lot of protocols. You know, Volifier has about 10 decks integrations at the moment. Zero X being the biggest one. So we operate the largest X staking pool. And it's, it's great to see kind of DALs kind of come back.

back around and start, you know, taking their place again. For a while, you know, DOWs were kind of like a meme and people started kind of veering away from them, but now they're starting to kind of come back. And it's, it's nice to see that the staking pool, you know, that Xerox has created working and working well. And it's incentivizing market makers to kind of come in and provide a service, you know, whereas back when I started, the only incentive was any profit that you can capture, you know, whereas now there's kind of more mechanisms for you to play with. And it's It's even gotten to the point now where, you know, there's certain cases where you can actually bank on that profit being there. So you can actually potentially trade at break even or even a loss because, you know, you know, there's a staking reward coming.

And so it's nice to see the space evolve. And there's obviously a lot more in store for VoliFire in the future. But I'm kind of even more excited to talk about Keeper Dow, which is what we're here today to speak about. So Vodifier, you're continuing with the operations. and the market makers keep running and KeeperDAO is a different venture that you're pursuing with a different set of co-founders. Yes, that is correct. And what's interesting, though, is they do tend to interact on the blockchain quite frequently.

You know, for example, our KeeperBot and KeeperDow does regularly fill orders that were signed by Volleyfire. So, you know, they're totally separate, but they do have a lot of interactions. So let's talk about Keeper Dow. So Keeper Dow's self-description is that it is an on-chain liquidity underwriter for Defi. So there's a lot to unpack there. How would you describe what Keeper-Dow does and what its mission is? Sure. So the goal of Keeper-Dal is to capture profit opportunities on-chain and distribute them to the various participants involved.

What's interesting about that is there's a lot of participants, you know, today that actually don't see any of this profit, even though they participate in making it possible. You know, so for example, the participants, we could kind of break them down into several categories. We have users, which could just be a defy product user. Maybe they're making a trade or a limit order or using a dex aggregator. You have liquidity providers who are staking some liquidity, hoping to gain a yield. You have keepers, which are these traders operating these bots. And then you have, you know, for us, you know, integration partners, which would be partnering with these various defy products. You know, today when there's profit captured, you know, the majority of it goes typically to one of two places, either the keeper or the minor.

You know, and so what we would like to do and what we've already begun doing is to kind of redistribute that and also get the user involved and even defy products involved. So say if there's a profit opportunity, but maybe this user was responsible for, you know, creating that profit opportunity. Let's make sure to let them share in the profit. And so, you know, the first thing that Keeper Dow is doing is capturing some of this profit and helping to redistribute it. The second big thing is coordinating all of these various participants. And there's a lot of factors in coordination here because you could coordinate keepers and liquidity providers and have a, you know, a flash loan pool. But you could also coordinate users and keepers and essentially have them kind of collude together to, you know, share this profit rather than all of it just going to keepers and miners. You could also, you know, coordinate keepers with other keepers and basically say, hey, you know, if you take this one, I'll take that one. Or, hey, we'll agree to not grim trigger each other. And if we do, we do somehow get out of line, then there'll be a system in place to prevent us from doing that, you know, going forward, something like that. And then the last goal really is, to kind of create this entity as a DAO on chain

and enable all the participants to govern the system. And that's something that we're working towards. You know, it's not a DAO today, but it's something that we're working towards one step at a time, and that should be coming in, you know, soon TM, as everyone likes to say. Maybe just to illustrate, you know, like these roles, so you mentioned a few different roles,

like users, keepers, miners, maybe some other roles, right? Could you go through a practical example of either a liquidation or an arbitrage opportunity and just cover these different roles in that particular opportunity and how it works today? Sure. Yeah. So today, it's common for a user to say they submit a transaction to Uniswap directly or it could be a Dex aggregator that ultimately goes through Uniswap. There are a lot of bots on chain that will use that transaction to extract profit from. And it could be at the expense of the user, or maybe it could be at the expense of something else. But in one example, let's say the user defines a slippage parameter. And this bot could essentially, you know, sandwich attack them

in such a way that it pushes their slippage to the max and then they extract profit. And now the user who essentially created this trading opportunity that did not exist before they broadcasted their trade, you know, has now been essentially exploited for profit, right? And so, you know, one of the goals is to, you know, if the user is going to provide a trading opportunity and profit results from it, to share that profit directly back from the user. And another simple example would be, you know, let's just say there's arbitrage that's mined into a block. And at any moment, you know, somebody could arbitrage uniswap and sushi swap. You know, a keeper will make a bid to try to capture that profit. And let's just say there's a $100 profit available. The first

keeper might bid $20. Another keeper might see his transaction in the MMPL and bid, you know, $40. And then, you know, a third keeper might come in and see both of them and they might bid $60. And that bid will go all the way up. In a lot of cases, it'll go up to near 100%. And, you know, in some cases, it'll grim trigger and actually go over 100%. In other cases, you know, maybe it'll just get mined in quickly and it'll kind of stay around the 60, 70% marker. And so there's a lot of different types of these opportunities out there. And, you know, the miners and the keepers tend to capture the majority of that value. And in some types of opportunities, most of the value goes to the miners. And other types of opportunities, most of the value goes to the actual trader themselves.

And it gets trickier, too, when something like a liquidation is involved because you have price oracles and there's potential for price oracle manipulation and other things there. So there's, there's, you know, a lot of different, a lot of different examples, but all of them kind of revolve around, you know, the user getting nothing, even though the user was participating in the system. So to kind of look at this from another angle, what Keeper Dow kind of proposes is that liquidity providers kind of pool their funds together and then keepers use, you know, that liquidity to execute these arbitrage opportunities, whatever the arbitrage opportunity is.

So basically, is there any constraint other than that it has to be executed within the same block? So today, that is a big constraint. So when we talk about, you know, using pooled funds for trading, as from a keeper's perspective, you know, keepers can actually trade with their own funds. as well. So if we're talking about a small trade, that's maybe a couple thousand dollars of volume, you know, a keeper may use their own funds in their own smart contract to trade. But if we're talking about a large trade, maybe it's liquidation or maybe it's just a massive arbitrage. You know, the keeper typically is required to flash loan in order to facilitate trade for that. Because most keepers don't have, you know, millions of dollars in a variety of tokens laying around.

And that's where the flash loan pool comes in and provides a lot of value. You know, today, it is that limitation to where this execution has to happen in one block, you know, due to, you know, the way flash loans work. We are, you know, thinking through a way for, you know, keepers to have a reputation and basically say, you know, okay, this keeper can, you know, perform some sort of action over multiple blocks based on his reputation. But then it gets a little tricky because, you know, now it's like what happens if they don't return? the funds or what happens if they just return them late? You know, you need, you need kind of need something to slash, whether it's reputation or maybe maybe some staked asset somewhere. But then it gets even trickier because, you know, if the keeper has to stake a bunch of assets in order for that reputation, they could have just used that asset instead of flash loaning. You know,

so there's a lot of details to work out there. And we are currently working them out, but we don't have that system in place yet. It's something that we're working on for the future. But yeah, as of today, the limitation does exist where, you know, the flash loan has to happen within one block. Okay, so basically what Keeper Dau does, it gives the keeper access to capital, right? And you also talked about something called grim triggering earlier. Can we talk about what that is? Sure. Yeah, so a grim trigger is essentially a trading technique where one party pushes the trade all the way to break even or even beyond.

And so in the earlier example I gave where there was a $100 profit opportunity, you know, for one of the traders to Grim Trigger, they're basically saying I'm willing to spend $100 or maybe even $105 to capture that $100. And they kind of make it, you know, a losing trade for everyone else. So they're essentially signaling to the other traders, you know, that they can't capture this. So grip triggering is an interesting mechanic because on one hand, you know, if we talk about Keeper Dow as a trading pool, that technique could be used to signal to other traders or potentially even other trading pools that it's time to work together and coordinate or else there will be no profit. But with all of the different techniques that are coming out for M.EV and arbitrage in general, it's very clear that there's really no one mechanism that can succeed. because if you have traders and miners kind of colluding together in an organized or unorganized way, in certain cases, grim triggering won't even be effective because that's kind of sliding under, you know, since if the miner doesn't want to mine in your transaction, they can just ignore it.

So there are quite a few, you know, techniques in play here at the same time. my current imagination of Keeper Dow is let's say there's an opportunity where you know there's an eat U.S.DC pool on Vineswap and there's an ETHUSDC pool on sushi swap and the prices are slightly diverging maybe you can imagine $1,800 on 1 and 1900

dollars per each on the other so so in theory if I have USDC I can go and buy ETH from the cheaper pool and sell ETH to the more expensive pool and I can get some extra EUSDC back. There's some profit opportunity. So maybe per ETH that you cycle,

there's a $100 profit opportunity where you can cycle hundreds of ETH and you can multiply that profit opportunity as big as it gets. Now, what Keeper Dow is allowing is that, let's say I'm an independent keeper. sovereign keeper, then in order to do this loop and realize $100 profit, I'm going to need to start with some USDC I own myself. And that's a constraint. So one may imagine Keeper Dow is, it's a pool of USDC where I can borrow USDC at the beginning of a transaction. I can do this loop,

then I can basically return all the USDC, and the profit that I make will be split according to some governance logic of the DAO. Yes, that's correct. And that would be essentially one feature of KeeperDAL, that would be just the liquidity pool feature. And yes, we have a lot of parameters that our team has set initially and will be kind of tweaking over time,

but the goal is to have the Dow control all of these parameters. And so just to go back to the different features that we have, so the liquidity providers providing liquidity into a pool that's a flash loan pool is essentially just one feature, right? We also have keepers that will be coordinating together. We also have essentially the hiding game, which is our mechanism to allow users and keepers to collude together to kind of hide arbitrage to return that back to.

to users. And these things can, in some cases, they can work independently of one another. In other cases, they can work all together. So in one example, if somebody wants to just use our flash loan pool to flash loan, they can do that for whatever purpose they're doing, whether it's an arbitrage or for some other purpose. But if somebody is, say, a keeper wants to use the flash loan pool within the hiding game to work with a user to facilitate the user's trade and also capture profit, they can do that as well. So these things can kind of be used together or independently. So one way to look at this is by looking at the competition at the competition between different keepers, right? So basically by having this grim triggering mechanism that you inevitably have on

the blockchain because things are public, you can you can ensure that you can erase someone else's profit, even if you can't take that profit yourself, but you can make sure that the other person doesn't have it, right? So basically that's in essence what this grim triggering is. You can't take it away from someone, but you can make sure that they don't get it. So basically what you kind of need is you kind of need to find a coordination point for the community, basically like a shelling point where people feel like this is kind of the most just mechanism or this is the mechanism that we can all, that we are all comfortable coordinating with

in order to have people not kind of take each other's profits away without actually getting them. So basically who actually gets them as the minor typically, who's typically at this level not participating in this game. We'll get to the involvement of the minor later. So how do you make sure that the keeper dower is actually the shelling point? How do you make sure that you're the shelling dower? How do you make sure that you are seen as the DAO that should govern how these profits are distributed between the different stakeholders?

Yeah, great question. The grim trigger itself is essentially a signal, you know, to other traders, which they're kind of feeling in the profit margin for certain types of trades, right? For just pure arbitrages, you know, if your profit margin is going towards zero, you know, you're essentially getting signaled that it's time for coordination. I mean, coordination is a natural evolution of this type of trading, right? I mean, people can't grim trigger forever. I mean, you can't break even and have small losses forever. You'll eventually want to coordinate into pools, right? You know, we're still evolving our trading strategies that, that happen in the wild in working towards this, but we're also still monitoring, you know,

some other strategies that people are implementing, whether it's kind of colluding with minors or using other techniques. You know, so it's, I can't really give you an answer today as to, you know, how, you know, we're essentially using Grim Trigger as kind of like, you know, an advertisement for Keeper Dow, mainly because at the moment we're actually focused, are, we're focusing our development time and our energy on the hiding game and kind of transitioning towards a Dow and preparing for the coordination game. And our actually, our first implementation of the coordination game will be coordinating the hiding game. We would like to also coordinate trades in the wild. It is quite a bit more complex because, you know, as you mentioned, it does involve a lot of

grim triggering and it does involve a lot of scenarios where you don't control as much. Like when you're trading in the hiding game, you control more because you kind of control the ecosystem. And you have the users who are colluding with you. But when you're trading in the wild, you know, you don't really control the users and you don't necessarily control the other bots, you know, so it is, it is trickier. So, you know, grim triggering in the wild is is a lot trickier to handle and implement properly, which is why coordinating in the wild is not our number one priority at the moment, but we will work towards that. And who knows, maybe once we are kind of happy with the hiding game and we have that kind of coordinating amongst a variety of keepers,

we may ultimately decide like some other projects have where when it comes time to coordinating in the wild, maybe that does involve coordinating with mining pools. We may get to that point as well. So I'm actually trying to understand these two concepts, which is like grim triggering and then the other thing is the hiding game. Grim triggering first. So the problem is the problem. is something like in the uniswops sushi swap example right like there's a hundred dollars profit to be made but imagine a word in which like keeper dow was simply like a flash loan boot the only utility it offered was i could take a flash loan so in that case if i'm a keeper i want to take a flashdown and execute this another keeper can also take a flashdown and try to execute the same same

And these two keepers will end up competing with each other because they want to put higher and higher transaction fees onto their transactions. And the end result of it is that the $100 profit is going to be allocated to a combination of the minor and the flash node pole. And the keepers will end up making very little. So essentially the need for coordination here arises in the sense that if you have two keepers, A and B, you want some kind of game to emerge where A and B, like, decide to collaborate and split up the profits for all such trades in the future. So if there are like a thousand trades to happen, they can collaborate, pay lower transaction fees, and split the profits 50-50.

So that is the collaboration you're trying to build via Keeper down, correct? Yes, that's correct. So our collaboration mechanism between keepers will be initially introduced in the hiding game because it's much simpler to introduce it there. Introducing it into the wild is very tricky because you can imagine a scenario where you have, say you have five keepers who are playing by the rules and behaving properly, you could have five more keepers who are not that are grim triggering the ones who are behaving. So then you end up with a gas auction anyways. So it does get very tricky when you're talking about something in an uncontrolled environment in the wild when it's uniswap, sushi swap, arbitrage. So then the question is, what is this hiding game that you're expecting to? Sure. So the hiding game is essentially our implementation to where we align incentives between users and keepers.

And so the idea is to take actions that users like, to perform that end up resulting in profit opportunities that get gas auctioned or get sandwiched traded and take some of those actions, put them in such a way that the user and the keeper can actually collude together and prevent that gas auction from ever happening or prevent that sandwich trade from ever happening and do it in such a way that now the user gets some of that profit when profit is captured. So imagine a user wanting to place a limit order. Instead of making this limit order fillable by anyone in the world,

because that would lead to a gas auction, make this fillable by only Keeper Dow Keepers. Now, Keeper Dow Keepers can look at that and say, okay, it's my turn. I'm going to capture this one and fill that. And oh, by the way, there was a $100 profit captured. Today, we're actually giving all of that profit back to the user in Rook tokens. And then the underlying,

line token that was captured goes into the Keeper Dow Treasury. In the future, we will take the, you know, the participants involved and give them each a share based on the percentage that is, you know, essentially decided by, you know, governance. So that way, rook holders can determine, you know, how much, how much of that profit should the user keep versus the keeper versus, you know, maybe the partner. Because maybe a Dex aggregator or maybe a Dex actually was the use. user in this case or facilitate a trade for the user because maybe this user didn't go to Keeperdow.com. Maybe this user went to some decks or some decks aggregator and they traded through there and it actually got routed through the hiding game. So some of that may actually

go back to the defy project in that case. And the goal here is to do this not only for for decks trades but other other common features that users use. For example, let's say they're going to take out a position. They're going to borrow some asset. and they're going to open up a lending position. You know, today, if a user's position goes underwater and they get liquidated, the user doesn't see any of that profit that gets captured by the bot. But, you know, our goal is to implement a system such that when the user gets liquidated, they actually participate in that profit capture.

You know, they're basically, you know, and this gets back to your question before about the on-chain underwriter. And essentially, if we're acting as the underwriter in this case, we can, you know, work with the user and say, look, you know, if you open up your position through us directly, instead of the protocol directly, we will share the profit with you and essentially incentivize them to run their positions through us instead of the protocol directly. So if you look at this closely, say, I totally understand where the arbitrage opportunities come from, say, if I go to uniswap directly, so basically I'll shift the price and people will want to backrun me. If I trade on limit order decks, people will want to front run me.

If I go to a decks aggregator, say, match, one inch or paraswap, they will kind of, they show you the route that they will route your trade. They will kind of use a linear combination out of all of these different sorts of things. And that still opens up the potential for minor extractable value or for basically being back or front run, despite the fact that you're going via a dex aggregator, right? So basically, my question is, how does Keeper Dow protocol kind of fit in with this?

So basically, is Keeper Dow integrated with the decks aggregators? And basically, the Dex aggregator will route me via. So basically, I go to Paraswap and it will route me via KeeperDAO? Or how exactly do I become Keeper Dow's user? Keeper Dow is actually not integrating with the Dex aggregators themselves. So technically any Keeperbot could integrate however they want to. If a Keeper bot wanted to integrate with a Dex aggregator, I suppose they could. Ours natively integrates with each individual protocol, probably the same exact way that a Dex

aggregator integrates with each native protocol themselves. Right? So, you know, if a user goes to, you know, the high, hiding game and wants to trade or goes to one of our integration partners and opens up a limit order, our bot essentially has its own router that decides what the most optimal route to make that trade would be. And that trade may be through uniswap or it may be through sushi swap or it may actually be through another hiding game user as well. So we can essentially match hiding game users with each other, which does open up a lot of possibilities there because now essentially you could have market

makers who are market making on the hiding game and facilitating trade that way. And then, you know, that would add more liquidity and add more value there too. But yeah, I mean, it's similar to, you know, today we don't show the path to the user like one inch does, which is, which is a great feature. And that's definitely something that we could consider adding. And it would be possible, too. The tricky thing would be, you know, we want to coordinate many keepers to kind of have a nice, a nice kind of deep layer of redundancy. That way, if, say, one keeper goes offline for some reason, there's another keeper that can facilitate trade, or if maybe one keeper doesn't see arbitrage in a certain spot, another keeper does, go with the one that does see it. You know, certain keepers may have

different integrations, right? So the first keeper may have 10 integrations, and the second one may only have five, right? So the first keeper may see more opportunities than the second one. So it's nice to kind of have that redundancy, but the tricky thing about that is now, say if you want to show the to the user, we would now need, you know, a new line of communication to each keeper where they kind of respond and say, oh, by the way, I'm filling this trade and here's the path, but that would kind of be like after the fact, you know, so it would be a great feature idea to kind of have when the user is just first considering a trade, it would be nice to kind of see that path. That would be a nice feature.

So in the hiding game, what happens in effect is the routing is, the routing is, itself that is currently done in a centralized fashion by the likes of one-inch in paraswap and matcher is actually itself decentralized. Is that a fair way of putting it? It's done by the keepers, yeah, which would essentially be decentralized based on how many keepers you have. So today, the hiding game only supports one keeper, which is our internal keeper bot, but soon we would like to start onboarding more keepers. And that, adds a nice layer of decentralization because then, you know, the community isn't dependent on our keeper bot, which our keeper bot has been, you know, running and iterated over for many years,

which is great, but still you kind of don't want to be dependent on just one keeper bot. You want to have many of them with many different integrations and, you know, have unique characteristics of each. And maybe some are more effective than others and maybe some are less effective than others, but that'll kind of work itself out over time. Okay, I see. I think I kind of understand the hiding game now, to a certain extent, what does it mean to be an underwriter for the hiding game on KepaDow? The example that I gave earlier about the liquidation is a perfect example of that. And so say a user wants to come in and open up a lending position, maybe they want to borrow an ERC20 token,

having the user kind of giving that underwriting capability to Kieberdow is advantageous for them. And what that would mean is the user would open their position through our smart contract, and then we would then in turn open that position through the protocol that they chose. And let's say it's compound, for example, instead of the user borrowing from compound directly, they would borrow through us, and we would borrow from compound for them. And the advantage is if there is a liquidation, our keeper will execute that liquidation in such a way that there is no gas auction possible. And then when there's profit captured, assuming that there is,

we will share that profit directly back with the user. So the user is actually now getting a huge advantage here because instead of losing, in some cases, you'll read about someone got liquidated and lost thousands or millions of dollars, in this case, they get a good percentage of that back. And initially, we've been setting those parameters to give 100% back to the user. and over time we'll kind of let the Dow decide, you know, so Keeper should get this percent and the user should get this percent.

And then in this case, too, if there's a partner involved, let's say that user didn't go through KeeperDow.com, let's say they went through a partner's website. You know, we would give that partner some as well. Let me be clear about how I become a user of KeeperDAO. So basically say I have a maker CDP that is almost underwater. So I open that on OASIS.Borrow, and how do I make sure that your underwriters are keeping me safe? If you did open that on OASIS, then we wouldn't be keeping you safe.

What we could do is we could have a feature that allows you with, you know, very minimal clicks and very minimal transactions, convert your position from there through Keeper Dow instead. The other alternative is instead instead of opening it through Oasis, you just open it through us. But the feature would be such that your position ultimately does go through compound. You know, it's just kind of routed through our contract where our keeper bots and, you know, any keeper bot on the network is kind of watching for you and participating in that for you. And the nice thing about, you know, that redundancy layer is, you know, you're not worried about just one company's, one keeper bot protecting that for you, you now have a variety of them all over the world.

And what's the gas cost incurred by going through your contracts? Because I mean, if you look at the current gas prices, then any contract interaction that can be avoided, best be avoided, except for really large transactions. So what's the cost that I incur by going through you guys? So as far as the borrowing side, I don't have any gas figures on me at the moment, but it would cost, you know, slightly more gas to open the position through us than it would to open it directly through compound, for example, mainly because we have to do a little bit of overhead. You know, so if you open it with them directly, that would be the most efficient way to do it. But the good news is this overhead, you know, a little bit of overhead gas cost. And it's not going to be significant. hint. I don't want to quote an exact number, but let's say it's maybe 50K gas cost of additional overhead. So that may increase your gas cost of opening the position by 10 or 20 percent or something like that. And so I guess the probably the highest gas cost there would be if you wanted to convert a regular position into a keyboard application because that would essentially be like

kind of closing your position and then opening it through Keeper Dow again, which is ultimately opening it through, you know, compound again. That one would probably be, you know, a combined, kind of like a withdrawal deposit or I guess a close open, you know, sort of a mechanism, which would cost some gas. But yeah, it's tough when gas prices are high. It's tough to do, you know, say a $100 position when gas is $100. That's hard. Yeah. Yeah, I totally see that. So let's kind of wind back a little bit. So let's say I'm a liquidity provider for Keeper Dow. And what happens to my capital when it's idle, right?

There's only ever so much that you can use for arbitrage trades, right? That's correct. So when you deposit liquidity, you receive a K token, which is kind of like your receipt for that liquidity. and the holder of that K token is essentially receiving a reward for depositing liquidity and putting your liquidity to use. And today you'll earn that reward in Rook tokens. But the pool, the liquidity pool today is being used for flash loans by keepers to generate profit. We are taking the profit that's captured and put into the treasury.

And, you know, today the treasury is also being used to stake back into Keeper Dow to generate a yield for, you know, Rookholders who are essentially governing the treasury. And so we have plans to use the liquidity pool for a variety of yield generation activities. We are just now beginning to do that and actually implement that. The very first thing we've done with that is to take the Treasury funds, which are not the LP funds, but to take the Treasury funds and essentially stake them to have a larger flash loan pool. So in the future, as far as the liquidity pool itself goes, in the future, we would actually like the rook holders to be able to decide what happens there. And I actually imagine a dashboard where users can see, you know, here's what's been flashed loan. the last week. Here's what's been flashed loan last month. And maybe maybe die gets flash loaned more

than USDC or maybe Rapt Ether gets flash loaned more than, you know, uh, ren Bitcoin. And, and so you can decide like, okay, we should put 50% of our, you know, uh, ren Bitcoin and stake it into this protocol because we'll gain this yield. And, you know, over time, you know, people can make proposals and recalls can vote and decide on, on what's to be done. You know, in the short term, you know, we just kind of, you know, do a quick kind of, you know, discussion in the community and we just kind of make the decisions ourselves. But in the future, the Rookholders will be able to make all of those decisions. And I think a dashboard really empower people to get data and say, like, what is efficient? Like how many, you know, how many ether does, you know, Keeper now actually need

to perform these trades and these liquidations? Is this too much? And what else can do? You know, what are the opportunity costs and where can we put that? I think, you know, I think we're still a little bit away from having this dashboard and all of this information available for users. So that's something that will come with time whenever we kind of, you know, get more fully-fledged tools and dashboards out there. A lot of the opportunities in the in the defy yield farming space are fairly short-lived. So I would assume that making these decisions as a Dow is inherently difficult because you don't want to be spammed so you have like an attention bandwidth problem. But at the same time, you also don't want to give a small group of people executive control

because, I mean, that would kind of defy the purpose of the Dow, right? So how do you see this playing out? Yeah, that's a really good point. And these are things that all Dowls are trying to work through. So from what I've seen, you know, Dows tend to make, I guess, longer term or what's funny is I guess a long term decision in the crypto space is probably a medium term decision. You know, so I guess they're making more medium-term decisions at a slower pace, right? And yeah, I agree with you that you can't necessarily just jump on the new protocol that's farming at over 100% every other day.

Because it's hard to make those decisions quickly. Although we actually see a good opportunity with, you know, our on-chain underwriter for the next feature that's coming out for the hiding game as potentially one of those opportunities. that kind of has a higher reward mechanism to it. So, you know, like today, kind of taking our treasury and staking it back in the Keeper-Dal LP pool is one option, but, you know, we may see our next pool that's being launched, may generate even a higher yield, you know, depending on how well that does. So it's like we may internally, you know, have some good opportunities for that, kind of just staking on ourselves. But then, yeah, externally it's hard because you kind of have to make a slower, more methodical

decision just, you know, from the process of these dowls in voting and making sure that, you know, you don't want to have votes too often because then, you know, people are just going to kind of start ignoring them, you know, but you want to have them often enough that, that, you know, the community is happy with the funds being put to use because you definitely don't want idle funds. Nobody likes to see that in defy. This is fascinating. So you said earlier that the Keeper Dow governance currently is still done mostly in-house by your guys, but you're going to transition to a Dow soon. So what's what's the roadmap on that? So there's a few things that need to fall in place first. The roadmap on that is is not clearly defined because we're still kind of working

through a few of these, we'll call them like short-term challenges. And while some of them are presenting themselves more clearly than others, you know, we're trying to kind of let the pieces fall. Where I think, where I think the Dow voting comes. into high value in the short term would be setting things, setting parameters like where to allocate hiding game profit. And then also, as you mentioned, where to allocate idle funds. Say our flash loan pool is just too large. Where to allocate that. I think in the short term, those are, those are good values for that. And so what we need to do is we need to transition into, you know, mechanism that allows, you know, rook holders to make those decisions as opposed to just us internally

making those decisions. That's something we're still working out the details for. But I guess the next factor, which is kind of like a slightly, you know, longer term, you know, solution that we're working on would be staking rook to keepers, right? So once we introduce the coordination game and we have multiple keepers coordinating together, we essentially want to allow rookholders to determine reputation of keepers. Because let's say you have, let's say you have three keepers. If you allow rook holders to stake their rook on these keepers, they could essentially earn rook based on performance of these keepers.

And so the rookholders would be incentivized to choose wisely and maybe kind of do their own research with the help of all these tools and dashboards that kind of see in to what's going on, you know, maybe viewing the trades and viewing the profitability and viewing the efficiency of these keepers. And that's nice because it also kind of encouraged the community to build better tools to, you know, look at the efficiency of keepers and gauge them. And so say one keeper may have more integrations than another, but maybe the other keeper also does liquidations, whereas that first keeper only does arbitrage, you know, and so this will kind of add into it. And maybe one keeper, you know, just isn't very efficient for whatever reason so that, you know, they would potentially be staked less and potentially even lose their turns if they just, they turn off for a long. period of time. And so this will be a nice mechanism. But I also feel like that may involve,

you know, some Dow features as well. There may be some dependencies there as well. Cool. So basically all of this, the entire incentivization governance is, uh, depends on the Rook token, right? So how was the Rook token distributed? So basically who are the Rook token holders? And how do I become one if I want to partake in this? the Rook token economics are based on, you know, users participating in the system and Rookholders participating in the system. Or if you're not a Rookholder, you could just become a user and essentially start accruing them from your behaviors, right? So when we initially launched the token, we had a token distribution mechanism where you could provide liquidity and start accruing Rook.

and you could also share trading profits with the pool to start accruing Rook as well. And that was kind of an initial distribution mechanism that got the attention of a lot of liquidity providers and keepers. And today, you can also accrue Rook by participating in the hiding game as a user. So we don't yet have our borrowing underwriter feature out yet, but that should be out soon. you know, today we have our decks trading feature, which allows users to place limit orders. And when arbitrage is captured by executing your limit order, you share in the profit. And so, you know, if you wanted to today, you know, you could essentially, you know, buy Rook on a

dex or you could just essentially participate, you know, by lending out your, you know, tokens, depositing it to our flashloom pool and you'll, you'll accumulate Rook. And then the other option would be to just make your trades through Kiberdow.com. And so if you launch our app and click on the trade button, and let's say you wanted to, you know, just swap wrapped ether for USDC, for example, you would, you know, make your limit order. You would set your price, set your duration and fire that off. And it heads to our order book, which is basically orders that are only fillable by Keeper Dow Keepers. And today, that is only our keeper. And once we launch the coordination game, that'll be multiple keepers. And then, you know, once that gets executed, if your trade gets arbitraged in any way and generates a profit, that arbitrage, 100% of that goes back to the user in Rook tokens. And depending on how much was, how many arbitrages were captured that day and how much that value is, most days you'll actually get more value than your arbitrage. So most days, let's say if you capture $100 of arbitrage through your

trade, you may get, say, $110 of Rook tokens back. So one question is, like, in the future, do you imagine the software for the keepers as being standardized across all your keepers, or do you rather imagine your keepers as being, as developing their own intellectual property and, like, hiding the operations of this, of their system from other keepers? Yeah, that's a great question. I actually see it going both ways. And so today, I'd say probably 99% of the best traders out there,

keep their software in a proprietary fashion where they kind of maintain it and they don't share it with other people. There are a few bots floating around. And I've heard good things about some people using them. But it's hard because, you know, like picturing purely open source keeper software, it's tough because it's changing so fast. And it requires a pretty high level of, you know, engineering expertise to kind of build and maintain this.

You know, so I think the ones who are most successful at it are kind of so busy just kind of keeping up that they don't quite have time to like put into fully open sourcing it. You know, the software is very complex. You know, so it's kind of hard to, you know, take something like this and fully open source it. Plus, it's also interesting because there's a lot of different. ways to build this software. You know, some people rely on a lot of third party software, whether it's node services, mempool services, you know, it could just be a coin market

cap, you know, API, anything like that, whereas other people try to minimize those APIs and do as much as possible on their own. And other people just actually build their bots, you know, right into node infrastructure rather than kind of having them manage them separately. You know, so there's a lot of different ways to go about it. I actually appreciate that there's a variety of different techniques because that way, you know, like if one API goes offline, all the bots aren't just broken now, you know, something like that could potentially be a problem. So it is kind of nice to have the redundancy of different approaches and different strategies. That being said, there are a lot of types of trading that would do well in like a

standardized piece of software similar to just downloading a Geph node and running it. And we do have plans to do something like that. but it may not be for dex trading, at least not anytime soon. We're considering doing something like that for our liquidation KeeperBot, but we haven't yet decided if we're going to do that. Because, you know, obviously, if we release a KeeperBot, you know, a piece of software for Keepers to use, we want to make sure it's done well and it's easy to use and it's ready to be released, you know, because KeeperBots, they change so often.

And it could be mostly because of front running and trading patterns and trading strategies. But if you're talking about the hiding game, like something that's specific to the hiding game where front running isn't really an issue, then I think that's definitely more applicable. So our keeper bot that does Dex trading, you know, it was designed to trade in the wild. It trades in both the wild and in the hiding game. So I don't think that's a good candidate to open source just because it's way too complicated. you know, but I think a bot that specifically targets, say, you know, on-chain underwriting for the hiding game, I think that one could potentially be. I definitely see this happening at some point in the future. Hopefully it's not the distant future. Hopefully it's sooner rather than later because it

would be nice to, you know, have people be able to just essentially download a node and run it. And on that note, though, there may be another opportunity for people to do that sort of a thing. maybe, you know, like I actually envision trading in the future to be kind of more modular. Because today, keepers have to do everything, right? They have to do note infrastructure. They have to do, you know, front running and mempool. They have to write arbitrage algorithms. They have to integrate with all these dexes. They have to write smart contracts. Like I would like to envision, you know, a future where all of these things are modular and you could actually just specialize in one part. And maybe you specialize in just writing smart contract integrations that are incredibly

gas efficient. Or maybe you specialize in writing software that just purely does node infrastructure, or maybe you specialize in just purely arbitrage algorithms and then kind of by each component plug these together somehow. And maybe there's an open source piece of software for this and an open source piece of software for that. And whether this is a node you run or maybe just some component you just download from GitHub. But I would like to see, you know, a, way where keepers don't have to kind of, you know, be a jack of all trades and they could specialize and kind of come together. And, you know, so this one person who does this one thing really well, he gets rewarded for that one thing. And, you know, now we may be talking like a fraction of a

fraction of the profit instead of the whole fraction, you know, say if some percentage goes to keepers. Now he may be getting a percentage of that percentage, but still, I feel like that that may be a better ecosystem for everybody. And I see, you know, features like that. And I see, you know, features like the hiding game, that's going to be much simpler to do than it would be in the wild where you have gas auctions and front running and more complexity. So I do see that becoming possible. It's just a matter of kind of working through the details. But I'd say the first step for the coordination game is coordinating different keepers with different bots with different capabilities. And that's actually one of the big challenges with the coordination game is we want it to be simple enough so that

some random person who has a JavaScript bot can coordinate with a random person with a Python bot with a random person whose bot is running right in Geith. They all need to kind of work together and it needs to be a very simple protocol that they can all work together, even though they have different integrations and different features and maybe even different timings, maybe one bot's more efficient than the other. So assuming that all these things can come together, we don't want the coordination game to add too much friction to each individual keeper. It should be a pretty lightweight integration for them to kind of trade through their own smart contracts, but still be a part of the coordination game. So if you zoom out from here and you look at the coordination game happening between the different keepers and users, the party who truly loses here are the miners, right?

So do you expect resistance on that front? I would say yes and no. I would say that, so if for it, let's maybe keep a short-term lens on and let's say that the hiding game is incredibly successful. Because I guess in the very short-term lens, the hiding game would do exactly what you described. So if the popularity just grows massively and there could be some, you know, resistance there. Maybe we could see mining pools not mining a hiding game transaction, for example. And maybe there's some percentage of mining. pools that just don't mind hiding game transactions.

Or they could even, you know, generalize, you know, front run it in a generalized fashion and kind of accrue the profits to themselves, right? Because you guys are not, you're not a mining pool, right? So you don't include transactions in the blockchain. And as soon as you actually broadcast them, anyone could take them and kind of change them a little bit so that they are the beneficiary of that transaction, no? Well, if we're able to kind of wrap our, you know, trades within our one single transaction, like, you know, we, I guess, you know, for the hiding game, we're not submitting multiple transactions. I mean, depending on them to be in a certain order, it would just be essentially one single transaction.

Then that wouldn't be an issue. But I guess if, if, like, you know, if we were arbitraging a hiding game user against Uniswap, they could, they could, the minor influence. theory could manipulate uniswap to do something so that ours would fail, but it would be easier for them, I think, to just ignore our transaction altogether. But then, you know, another mining pool would find it. But I guess so like if you look at, you know, on chain underwriting, for example, we would do all of that in one single transaction. So like, say the user was going to get liquidated and we were going to share the profit with the user, that all happens in one transaction. So the, the miner couldn't, there's not like multiple transactions for them to reorder essentially. But they could still place your order at a convenient location in the block, right, in the worst possible location for you in the block?

They could, they could. But I think there's a lot of cases where that's not a huge issue for us. So let's say the way that our just-in-time underwriting would work is we would actually liquidate the user just a hair sooner than getting liquidated elsewhere. but the exchanges is they capture in that, that they share in that profit capture, right? So it's like if, as long as we're configured correctly, the,

any public, I guess any public bot wouldn't be able to liquidate that. Only our transaction would. So even if they put our transaction as the very last one in the block, you know, as long as we're configured properly, we would be the, Keeper Dow would be the only ones able to execute that liquidation at that point.

Okay. Okay, so if I'm a malicious keeper, is there any way I could submit a malicious keeper strategy and kind of harm users or other keepers or the liquidity providers? I would say there's a way that you could attempt to do it, but I don't think it would be very fruitful. And so I'll give you an example. So let's say that we have the coordination game running and there's three keepers, right? So our system involves, you know, taking turns and it also involves redundancy. So let's say keeper A has an opportunity and he's up first.

It's his turn. So he takes it, it succeeds, everything's good. Keeper B has the next opportunity. It's his turn. He takes it. He succeeds. Everything's good. Keeper C is the malicious keeper.

Now he's up. He's supposed to make a trade, but he decides to not. He just, this is, I guess, one way of being malicious is to just not do your job, right? So he decides to not do his job and, you know, a few seconds will go by. And the system, essentially the coordinating system, the users will decide, okay, he's missed his chance. Let's just say that's 15 seconds, for example. He had 15 seconds to perform his task and he missed it. So now it goes back to Keeper A again since Keeper C didn't do his job within 15 seconds. Now Keeper A can now execute that trade. And so the user, the user's experience didn't really get degraded. I mean, I guess his order got filled 15 seconds later, but it still got filled. And also the nice thing about since we're using the zero X protocol, and the user signed the price, right? So a keeper can't fill the order at a wrong price because, you know, the signature would be invalid. Right. So even if a keeper wants to be malicious, if they're filling the order, they're helping the user, right? So the keeper can't

really be malicious by filling the order incorrectly. It's like either they fill it or they don't. You know, so from that perspective, they can't really be malicious. But what a keeper could do to attempt to be malicious is they could essentially grim trigger other keepers, right? So let's say it was keeper A's turn, but Keeper C, out of turn, jumped in and tried to take an order and fill it. And then he went as far as taking the profit that was going to be captured and he grim triggered it. So now there's no profit. So what would happen is, you know, the coordinating keepers would agree that this user is acting out of turn. So he would get punished. And he would get punished. And he would his turns reduced.

Right? So for the user, this is actually okay. The user actually doesn't care because, I mean, I guess technically the user does care because the user's order got filled. And that's the goal. The first goal is to have the user's order gets filled. I guess technically the user got degraded service here because they were probably going to get a reward if the system had behaved correctly.

But because there was a grim trigger now, there was no reward. You know, so I guess in this case, you know, the user's service got degraded temporarily. but what happens is when a keeper acts out and the coordinating keepers agree that this keeper is acting out, his turns get slashed. So the number of turns he gets, you know, like think of his share of turns gets reduced. And the more he acts out, the more it gets reduced until eventually he's completely kicked out and he now can't be a keeper anymore. And so our reputation system will be such that we want it to be friendly enough to give new and aspiring keepers, chances give them opportunities to prove themselves. But if they get too many strikes in a row, you're out and you get your turns reduced to zero and you're booted out. And then if you want an

opportunity again, you know, you have to try again and kind of work your way up. But it's, it's going to be one of those things where, you know, if there's a potentially risky keeper or maybe a keeper with zero reputation or negative reputation or something and they want an opportunity, it's like maybe we'll give them an opportunity some small percentage of the time. But then as soon as they fail, say they fail that 15 second window, we're going to immediately put up a high reputation keeper to kind of make sure that goes through. That way the user's experience isn't degraded. And I guess the worst thing that could happen really is the user's reward gets degraded

because there should have been profit, but a keeper kind of acted out. And maybe there's even a way we can handle that. Like maybe we could somehow detect that. And then part of slashing the keeper goes to paying for that reward, although that mechanism does sound quite complex. That could be possible, I think. So from the point of Keeper Dow, what's the worst case scenario? Is it like a Keeper Dow, too, that colludes with a mining pool, or is it a keeper Dow too that colludes

with a client? What to you would be the worst case? Yeah. So I think it's actually not bad. other, say, trading pools kind of start popping up because I think just as much as keepers can coordinate with each other, I think other trading pools can coordinate with each other. You know, so if there's, you know, some other Keeperdowl, Keeper Dow 2.0 that pops up, even if they claim to be better, you know, I definitely see a dynamic where pools can can work

together and coordinate together, you know, and maybe they even have their own hiding game where it's like, we have our hiding game where it's only keeper down and they have their hiding game where it's only, you know, their keepers. But then in the wild, I definitely see a dynamic where this sort of thing can happen. But it does get tricky because I also feel like in the wild, you know, we use the term collusion, which I think has kind of like a negative connotation to it. But at the end of the day, you know, that's kind of what it is. But like, you know, working together in collusion, they're kind of similar.

So say it's a trading pool working together with a mining pool because it's, you know, it can be very efficient that way. That may be what is most successful in the wild is working together with mining pools. You know, I guess you could call it colluding, but, you know, not to sound negative because it just may be the most efficient way. Maybe you just kind of rebrand that to, you know, coordinating, you know, traders and mining pools coordinating. Again, I could see in the wild, I could see multiple pools working together. And I could also see, you know, multiple, you know, traders working together with miners. And we've actually had discussions with some miners. And that's definitely one of the interesting dynamics that has popped up in some of our discussions

is, you know, it's like if one mining pool is working together with this group of traders, what happens when another group of traders come on? Now you have a mining pool. Are they working with two traders or are they kind of married to one trader? And the only way they can, you know, switch to the other one is if they're no longer working with this trader, you know, so it's a lot of interesting dynamics coming through here. So if you look at the latest in the latest relationship between and miners, what comes to mind to me is the Tai Chi network that was recently launched by Sparkpool, which is kind of a white glove service where a US user can transmit your transaction directly to that network without publicizing it. And basically, Sparkpool will include it in the next

block that they mine. Basically, it shields you. from being front run or background or basically if you have any sort of exploit, it heals you from being generally front run. So where do you see this trend going? Because I mean, if you look at this and if you actually think this further, what will happen is you will have a small number or you will have some number of trusted Ethereum endpoints to whom you would give your transaction to be mined without ever. publicizing it directly.

And this would increase the barrier to entry for any other miner immeasurably, right? Because there'd be no free, that'd be no transactions in the mempool, so to speak. So how do you see this playing out? Do you think the MEV issue is going to be what breaks the decentralization of Ethereum? Or do you think basically we'll end up in a state where we will divide the right from mining the block from the right to ordering the transactions within that block, or how do you think this is going to play out? It's really hard to see one particular feature or strategy succeeding.

I think we'll ultimately have a lot. It'll just be a combination of features or strategy succeeding together. And it could be, it could just kind of go back to, you know, the roots of mining pools, you know, and how they're essentially independent from one another. You know, you may have some mining pools use this solution and this strategy. Other mining pools use this solution and this strategy. And maybe certain mining pools, you know, kind of work together to capture MV in this way and other ones do it a different way. But generally, I really like the Tai Chi network and what they're doing there. Today, you know, in its current form today, it works great when you don't necessarily need a transaction to get mined into the very next block or the next two.

or three blocks, just because you're kind of limited on hash rate there. That's the only downside. So, like, maybe one evolution here that I would love to see would be, say, a similar Tai Chi network for every single mining pool. Even having this feature kind of standard within node infrastructure would be nice because then, you know, no matter which, you know, minor you're speaking to, you know, you could have this level of privacy. But it's like technically the mining pool can do whatever they want. So, you know, not all of them might go for that. You know, maybe only some fraction of them would go for that. So we may only see a fraction of the hash rate have this sort of private solution. And then I guess the other problem, too, is, I mean, what's to stopping a

what's stopping a mining pool from claiming that it's private when they're still just front-running it anyway, you know? So it's kind of like, it's tricky. Like I do, I do, I appreciate that, you know, nodes and mining pools are kind of able to kind of have the flexibility to do it their own way. I mean, that's kind of what makes it decentralized. You know, hopefully, hopefully we can get to a point to where either say something like a Tai Chi network, the hash power of that feature grows dramatically. Like even if you could say like have like, you know, 70 or 80 percent of the network has some sort of a trusted solution, then you just need to, when you're broadcasting your private transaction, you just send it.

to 80% of the network and, you know, the other 20%, you just say, well, if they mine the next block, oh well, you know, that would be kind of nice. But, yeah, as far as like all of these solutions in general go, I kind of see them finding a way to coexist. I think multiple solutions will probably win in the end and we'll just be using multiple solutions in the future. It's hard to say if any one particular one will trump everything else. It's tricky because, you know, if you look at, you know, these profit opportunities today, I mean, they're going to be changing so much over the next few years. And they really have over the last few years. And with layer two solutions coming on board and ETH two coming on board, I mean, there's just, I think it's going to get even more complex than it already is. Like, unfortunately, I don't really see it being completely solved. I think it just becomes more complex, especially with all these different layer twos. And you know, you'll have people arbitraging between various layer twos between layer one and layer two, you know, between other blockchains and in Ethereum. And so I, I, unfortunately, Unfortunately, I don't really see it getting any simpler or any, you know, more complete.

It might just grow more complex, but maybe we have, you know, decent solutions where, you know, a user can just simply make a trade to uniswap in a private fashion without having to go through all these other steps. And like I said, maybe it's just as simple as maybe instead of just one Tai Chi network, we have, you know, some good percentage of hash rate. And they can say, you know what, I don't care if my transaction gets mined in the next block because if I've got 50% hash right, hopefully it'll be mined in within the next two and they'll be fine, you know, so. something like that, hopefully we'll pan out. So you don't think MEP is going to break Ethereum? I like some of the solutions and proposals that have been coming out. I don't necessarily think it's going to break it because I think it's just kind of a part of having a decentralized network with assets being traded.

I mean, it's kind of natural. I don't necessarily think it's going to kill it because hopefully we can kind of stay ahead of the cat and mouse game, and it doesn't kind of bring it to a screeching halt. You know, like, for example, you know, the first in, first out upgrade that was made helped prevent a lot of the, you know, tailgating strategies from spamming the networks. That was, I think, last year. And then, you know, some of the solutions like proposed to kind of, I guess, eliminate the gas token, so to speak. It's kind of helpful, too, because that kind of prevents that. If we can kind of work towards it and then also just kind of implement solutions to kind of help, you know,

streamline this process to capture the value and distribute it, you know, to parties involved. I think that's good. I don't necessarily think MEV is going to bring Ethereum down to its knees and completely, you know, destroy it. No. Do you think commit and reveal schemes where basically you commit an encrypted order or something and then basically it's committed and then you have to. reveal it later. Do you think that's going to alleviate the problem to a certain extent? That's a good question. I don't know if I've really studied that enough to kind of offer an opinion on it, but it's possible. I also wonder, like, I don't know how efficient that is.

Do you have an example? Because I'm curious about the efficiency of that in terms of, you know, I guess from a trader's perspective. I mean, there's different ways you could do it, right? So basically, you could encrypt a trade with, say, three different, I mean, basically there are these distributed key generation things where you can encrypt with a number of keys and you can decrypt with any number of, any subset of a number of these private keys, right? So basically you could have these schemes where you encrypt your order and it gets committed and then basically there are these revealers and a subset of these revealers need to decode it in order for it to become a valid order on the blockchain.

So you can't basically, no single revida can kind of block it. And it's kind of out of your hands. All of these cryptographic solutions are typically fairly gas intensive. That's what I was going to wonder is like, I wonder, you know, it sounds like it may actually involve multiple transactions and then it may also be gas intensive, which is, but it's, you know, it may be, yeah, it may be effective because if you're, if you're dealing with like a massive, massive arbitrage, you know, what's a million gas? You know, what does that matter? But I guess if you're pushing thin profit margins, it may not work. But,

but again, if you're, if you're looking to capture a million dollars, then spending a million gas at 200 G-WA doesn't really mean anything. So it may very well be. Yeah, I'll have to do some more research on it. I continue to be fascinated by how even putting together fairly basic elements of, you know, the trading, the trading world kind of results in such enormously complex games where you can clude and collaborate and kind of grieve someone else. And so on, I think it's endlessly fascinating. I'm super curious to see how it plays out over, say, the next year or two. Yeah, absolutely. Well, super good to have you on, Joey. Thank you so much.

Yeah, thank you so much. I really enjoy this. Thank you for joining us on this week's episode. We release new episodes every week. You can find and subscribe to the show on iTunes, Spotify, YouTube, SoundCloud, or wherever you listen to podcasts. And if you have a Google Home or Alexa device, you can tell it to listen to the latest episode of the Epicenter podcast. Go to epicenter.tv slash subscribe for a full list of places where you can watch and listen. And while you're there, be sure to sign up for the newsletter, so you get new episodes in your inbox as they're released. If you want to interact with us, guests or other podcast listeners,

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