Ouyi OKEx launched Eden Network, can it ignite the MEV track?

On September 10, Ouyi OKEx officially launched Eden Network (EDEN), which is the first among the top trading platforms. As of press time, EDEN was tentatively quoted at $7, up 41.14% from the opening price.

According to public information, Eden Network is a priority transaction network that protects traders from being preempted and creates incentives for block producers after the implementation of Ethereum EIP-1559, allowing for a fairer distribution of maximum extractable value (MEV), EDEN is the governance token of the network.

In fact, the previous Eden Network was almost unknown, and the MEV track it was in was also regarded as a niche field, so that there were not many reports on Eden and MEV in the industry media.

However, this does not affect the development of Eden at all. The project has completed a US$17.4 million seed round of financing led by Multicoin Capital, and other investors include Alameda Research (FTX parent company), Yearn.Finance founder Andre Cronje, etc. Two weeks after its official launch, its participating computing power accounted for 50.02%, which means that half of the blocks on Ethereum are currently Eden blocks.

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Eden Network: A dark horse on the MEV track

To fully understand Eden Network, you must first understand what MEV is. The full name of MEV is "Miner Extractable Value", that is, miners can extract value. It was first proposed by Philp Daian and others. With the rapid development of the DeFi track, it has gradually been valued by people, and it is also regarded as the "Ethereum Dark Forest". .

Specifically, the operation of the Ethereum network relies on miners to package transactions and generate blocks to run. When miners package transactions, they can include certain transactions, exclude them, or sort transactions. Through these operations, miners may obtain other values ​​besides transaction fees and block rewards. These extra values ​​are called MEV, which are mostly seen in arbitrage transactions in DeFi. The main purpose of Eden Network is to eliminate this kind of MEV.

In the MEV ecosystem, there are four main stakeholders including block producers, robots, applications and ordinary network users. Eden Network chooses to be user-centric to solve the MEV problem, allowing network participants to guarantee placement and prevent arbitrary reordering.

The system provides a set of transparent and fair rules to order transactions within each block. The accompanying token reward system enables MEV profits for block producers to maximize network security. According to the collation of 8090 Investment Research Department, Eden Network mainly exerts its value from the following four aspects:

1. Create a unique transaction sequence

The block structure using Eden Network is divided into four layers according to the order of transactions: Slot Tenant (slot tenant), Transaction Bundle (transaction bundle), Staked EDEN (pledged EDEN transaction), and public pool. The participants of the first three slots are called slot tenants, and the transactions issued by slot tenants are prioritized in sorting.

2. Adapt to EIP-1559

Eden Network's block production is adapted to the transaction fee mechanism of EIP-1559, and the order of transactions will be based on the EDEN token balance of the transaction address. Every transaction in an Eden Network block must pay an Ethereum base fee denominated in ETH. Eden Network blocks are a strict subset of the valid, potential Ethereum block set that can be adapted to EIP-1559 under the consensus rules of a specific block height.

3. Block producers who package transactions according to the agreement can get rewards

Network block producers who design packaged transactions according to the protocol will receive 60% of the monthly issuance in a stable state. If a block producer does not submit a transaction by EDEN holder, or does not place a slot transaction in the appropriate slot, the block producer will not receive their share of the EDEN reward. If an Eden block producer consistently violates the protocol's ordering rules, they may be voted off the network or have future rewards cut.

4.Eden DAO

Block producers participating in Eden Network are the core members of Eden DAO. The purpose of Eden DAO is to ensure that block producers implement block submissions according to the requirements of the Eden Network, and do not scan, reorganize, or insert transactions in a given block.

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EDEN value analysis

As the governance token of the Eden Network ecology, EDEN has a total circulation of 250,000,000 pieces, and the current total circulation is 77,535,153 pieces. Calculated at $7, EDEN's circulation market value is about 540 million U.S. dollars, occupying the 91st place in the market value list.

Regarding the future value of EDEN, we might as well take a look at the development of the entire MEV track.

According to MEV-Explore data, from January 2020 to August 25 this year, miners earned more than 700 million US dollars through MEV in the blocks they mined, and MEV was worth 27 million US dollars in the past 30 days.

Assuming that the average daily MEV is maintained at US$900,000 and Eden Network can gain more than 50% market share in the MEV market, then Eden’s average daily MEV is as high as US$450,000, and the annualized rate is as high as US$160 million. If the EDEN token can capture an annualized fee of more than $10 million, it will be able to rank among the current major DeFi protocols.

It is worth noting that, two weeks after the official launch, Eden Netwok’s participation in computing power has reached 53%. In other words, currently half of the blocks on Ethereum are EDEN blocks. Based on this calculation, EDEN can capture hundreds of thousands of dollars in daily value fees, so it has the potential to become a mainstream DeFi token.

In terms of ecological cooperation, Eden has integrated with three protocols including SushiSwap, and is expected to integrate with more protocols in the future. In addition, the following three points also contribute to the value release of EDEN:

1. The current circulation of EDEN is relatively small. After it is launched on OKEx, it will be recognized by more investors. It is not ruled out that more trading platforms will follow up.

2. The project has received the support of well-known institutions such as Multicoin Capital, and AC, the founder of YFI, and SAM, the founder of FTT, are also on their platforms.

3. Anti-sandwich robot trading is increasingly becoming a rigid demand. Now a minimum pledge of 100 EDEN can submit a transaction to the Eden Netwok network and be protected by MEV, and 3.3% of the tax EDEN will be burned every day, which means that there will be a steady stream of EDEN being pledged or destroyed.

From a fundamental point of view, Eden is expected to become the dark horse of MEV. As for the value of the token EDEN, it depends not only on the overall development of the MEV track, but also on the ecological construction of Eden Netwok. It is recommended that investors decide whether to participate in it after fully understanding MEV and Eden Netwok.