Redistribute MEV, can KeeperDAO change the rules of the Ethereum game?

Editor's Note: This article comes fromBabbitt Information (ID: bitcoin8btc)Editor's Note: This article comes from

Babbitt Information (ID: bitcoin8btc)

Babbitt Information (ID: bitcoin8btc)

, author: KeeperDAO, compilation: free and easy, released with authorization.

24 hours after the end of the KeeperDAO liquidity and arbitrage mining program, KeeperDAO will enable the hidden game function in an attempt to redistribute MEV (miners can extract value) and reduce gas competition among liquidators, which means that the Ethereum network Congestion will improve.

(The Turk, a chess-playing machine, is a mechanical illusion that allows a hidden chess master to operate the machine. With the help of a skilled operator, The Turk has won over 84 years demonstrated in Europe and the Americas. most of the games)

Hiding Game is a cooperation between users and arbitrageurs (arbitrage bots), which hides MEV (profit on the chain, also known as miner extractable value) by encapsulating transactions/debts in specialized on-chain contracts. It maximizes profit from these opportunities by having priority access. The protocol then shares the profits directly with users as rewards for their use of KeeperDAO.

HidingBook is a back-end infrastructure component that hides game DEX trading functions. It is a virtual storage pool (mempool) that allows users and liquidators (keepers) to coordinate, capture and distribute MEVs.

This article will give a brief introduction to the hidden game function of KeeperDAO.

How to Participate in the Hidden Game

Users, DeFi products, and liquidators (keepers) can all participate in the redistribution of MEV and obtain profits. For users, they just need to send limit orders and borrow positions through hidden games.

For DeFi product operators, DEX, DEX aggregators, wallets, etc., they only need to integrate their DeFi products with "hidden games".

For all involved, joining the "hidden game" means capturing MEV without having to transfer value to others. You can refer to keeperdao's customer and partner integration guide.

• For keepers, see the Keeper Integration Guide for how to coordinate as a keeper in hidden games.

• Participants eligible for awards

• Every time MEV is withdrawn, all hidden game participants share the ROOK reward. Below is a breakdown of the participants and their interests:

• User - anyone who uses hidden game products through UI or API;

• Treasury - a token managed by ROOK holders;

excitation

LP - liquidity provider in the KeeperDAO liquidity pool;

reward_user = profit * share_user
reward_keeper = profit * share_keeper
reward_treasury = profit * share_treasury
reward_lp = profit * share_lp
reward_partner = profit * share_partner

Partners - entities that partner with KeeperDAO;

excitation

The profits generated by the keeper involved in the participants will be returned to the participants according to their percentage of stake.

All participants are eligible for rewards. The exact percentage, however, depends on governance and changes over time, allowing KeeperDAO to increase incentives for the right participants when needed.

initial incentive plan

• Users will receive 100% of the hidden game ROOK rewards based on the profits generated by the keeper, and the treasury will receive 100% of the base token profits generated by the keeper. This program is great for first-time launches as it incentivizes users to immediately start using hidden games for their DEX trading as well as lending positions (soon to be supported).

• Benefits of Participating in Hidden Games

• User benefits

• ROOK rewards will be generated every time the keeper arbitrages your order or liquidates your loan position;

• For limit orders, this results in users getting a better trade price than they signed;

• For borrowed positions, this will result in the user receiving a% profit from the liquidation arbitrage in case their position goes underwater and is liquidated;

Prevent invisible slippage caused by front-running attacks;

• Prevent sandwich trading attacks (which can lead to large slippage);

• Transactions can be carried out without paying gas;

• Partner benefits

• Each time a user generates MEV using a hidden game, a ROOK reward is generated;

Your users inherit the user benefits of hidden games;

• Get synergy between your DeFi product and hidden game product;

• Add new features quickly and easily;

• Benefits of a liquidator (Keeper)

• Generate ROOK rewards to properly facilitate user transactions and return captured MEV;

• No gas auction required;

maximize profit opportunities;

• An ERC20 token transaction protocol that saves Gas efficiently;

• Bypassing Mempool front-running competition;

Benefits of Liquidity Providers (LPs)

Obtain ROOK income;

Earning opportunities for the base token;

MEV reallocation

The above percentages are for illustrative purposes only, and the actual MEV distribution varies greatly from transaction to transaction. The key point here is that the majority of MEV goes directly to the miners as the keeper auctions compete with each other. While both users and DeFi products participate in creating MEV opportunities, they get nothing.

Obviously, this is very bad for user experience. The liquidator (Keeper) gas auction will cause network congestion, which will cause the gas price to rise. For example, a user may have made a large transaction on Uniswap, which creates an arbitrage opportunity between Uniswap and Balancer, which will trigger arbitrage competition.

For the liquidator (keeper), this experience is also bad, because during the gas auction period, almost all profits flow directly to the miners. keeper) and the portrayal of the relationship between miners.

While the hidden game allows all participants to create, hide and share MEV (the above diagram is for illustration purposes only), the exact distribution percentage is subject to governance and changes over time. It should be noted that Keeperdao does not intend to provide ROOK rewards to miners.

And users will get the most benefit from hidden games. First, hidden games will eliminate gas auctions, thereby reducing network congestion, which leads to lower gas prices and better transaction experience for users. In addition, users not only do not need to pay gas fees, but also no longer need to worry about front-running or slippage attacks.

Keepers in hidden games will also have various benefits, all of which unfold by preventing gas auctions and enabling coordination, more on coordination to be announced in the future.

Liquidators who can participate

According to the design of the project, only KeeperDAO liquidators can execute the orders of hidden game users, and non-KeeperDAO liquidators (including robots and manual traders) cannot participate. This is the main mechanism to prevent gas auctions. All KeeperDAO liquidators must have their address whitelisted to become a hidden game liquidator. If a liquidator fails to fill user orders consecutively or triggers other peer liquidators consecutively, their turn chances are reduced until they are eventually blacklisted. In the future, ROOK staking, slashing, and inflation will allow the market to control the actions of liquidators and illustrate the prioritization of MEV capture priorities (read more about the coordination game in the white paper).