ZKV Presents... The Lab Unplugged: Interchain MEV

Transcript

welcome to anyone who's just arrived and I think we're going to be telling folks to head over to the sessions tab just so you know um the way that hop-in works I think actually I need to point this way but like you have two chats you have the event chat and the sessions chat and um we're going to be using the sessions chat when you're talking about anything related to what's going on on the screen and the events is maybe more for like before and after and when people first arrive we're going to be basically asking them to join the session so yeah you should open up the sessions tab I

believe it's this way I always am pointing around is this right does that look right to you no this way okay oh man um anyway okay so yeah take open up the chat um say hi so that we know you're here and that you can see us and that we're coming in clear uh yeah we need to hear from you if there's any audio problems or anything like that and we usually want to wait just a few minutes to for people to arrive so I think we'll give them a little bit longer um but yeah is there anything else that we should think about or oh yeah so Magnus yeah yeah please do not press the blue button oh yeah don't press the blue

button but Magnus just FYI you're in the events chat so if you look there's event and sessions click on the sessions chat that's where we want to uh talk to you or want to hear from you and yeah there's a blue button up at the top people click it but what that actually means is you're asking to come on stage and so if you're not a speaker there's no need to touch that button only the speakers should all right so I think if there's a good it seems like a good group of people these intros oh there okay we see some people arriving good um okay let's kick off so we are going to be doing uh like

we're here for the lab unplugged event we're looking at interchain Mev this is the first time that we're doing an event that's focused more on the osmosis ecosystem we've done a number focused on Cosmos but yeah we wanted to sort of start to explore this ecosystem deeper we do these events I mean we've done quite a few of them now kind of online short form but like getting to the the Crux of a matter really trying to understand a topic um and so we're very excited to in this particular one cover the topic of Mev this is brought to you by the ZK validator uh Agni and I are both part of that group uh we are a validator we're running on a

number of different networks I'm going to tell you in a moment and yeah this is we are kind of putting on this event so what ZK validator does is it aims to support privacy in ZK Tech across multiple blockchain networks and we do this through a number of ways um the networks that we're focused on are the networks that were validators on and we actually are quite present in the cosmos ecosystem we're now live on osmosis as well as the cosmos Hub evmos and agork as well as a batch of other networks we're also on a number of test Nets um yeah the org has grown a lot we've gotten to explore a lot so it's been a good journey uh so here's what we here's our team

today so we're nine wow uh I think this is this every time we do it it's a little bit bigger it's very cool um but yeah so what we tend to do at the VK validator is we run validators we choose like networks that we feel strategically aligned with we act as advocates for privacy and ZK Tech we participate in governance we support emerging teams in those networks and we also aim to launch initiatives to promote and fund ZK Tech now this particular event isn't so much focused on ZK Tech I'm going to go into a little bit of like our initiative so we often do these event series that are like privacy and Cosmos privacy and XYZ or ZK something now when we started building

up this event we realized that like the osmosis CK Community was pretty small hard to find and so we instead decided to like focus on a topic that we thought was really interesting for osmosis today something that we could also learn from but just back on zkv what we also do as an org is we've incubated something called ZK hack which is a Learning Hub there we do events and content if you're not if you haven't heard of it it's called CK like check out zkhack.dev we're doing an IRL ZK hackathon in at the end of March we also have done things like the open legal report working group so what that is all about is bringing together people

across the industry working in ZK Tech to try to understand what are the regulatory questions what are the opportunities what can we do um oh people are asking is the event recorded indeed it is it will be recorded and it will be on the Zero knowledge YouTube channel zero note podcast YouTube channel um but anyway I'll continue so other things that the zkv that ZK validator does is early stage funding we do this through investment and grants we were one of the organizers of the ZK Tech side round of recent get coin grants um so yeah I don't know if you saw us there but we're always trying to find innovative ways to get like funding into the hands of really good Builders and we

also do some of the building ourselves yeah so I think I'm going to invite Agnieszka to tell us a little bit about this event yes hi everybody I'm so excited to see you uh over here so except for all the goals that we have uh written down over here we also like Anna mentioned want to reach out to the osmosis Community we want to hear from you we want your feedback so if after this event there's anything that comes into your mind and you want to share with us please do you're gonna have an email address that you can reach us uh and just tell us what you need we want to meet you we want to um really do more things for osmosis as well goes for this event we want to

introduce ourselves as well to the osmosis Community we want to show you who we are what we are doing how amazing the things are that we can do together we also want to explore the topics of the med on osmosis and within the larger Community context this is something that it's really really new and exciting I know I'm going to learn a lot today so I'm very very happy to to be here and participate in it and we also want to allow the participant to gain a deeper understanding of the current state on of the nav and what it means for the future of the cosmos ecosystem because I'm pretty sure it's going to be one of the most interesting topics for the next month

yes what is the event schedule I'm pretty sure you already saw it when you were registering but let's go through it once again so now we are at the introduction uh we have four amazing talks we have four different teams that are gonna present today informal systems skip protocol mechatec osmosis lab and at the end we're gonna have a panel somebody just called uh for Zaki and Zaki appeared yeah Zaki is going to be one of our panelists today so stay with us till the end and our media partner is DK podcast yeah waving here to Anna somebody was asking about it if it's going to be recorded

yes thanks to ZK podcast and thanks to the YouTube channel the exit podcast has everything is going to be recorded and after that uh put into the YouTube channel so you're gonna see um a link in a second and things to look out for like Anna mentioned we do a lot of initiatives that are around events as well so somewhere in June look out for privacy in Cosmos yeah it's it's the second one that we are doing the first one we did last year in Amsterdam and it was amazing so we want to do something again that is going to be maybe even better

I hope it's gonna be better and of course um sign up to our Cosmos newsletter uh we hear a lot of feedback about it it's amazing newsletter Hector who is uh responsible for it is here with us as well so sign up for it you're gonna see the link in a second in the chat as well and yes thank you for participating if you want to learn a little bit more about VK validator who we are what we are doing this is our website we also have a Twitter like I mentioned if you want to give any feedback to us if you want us to do uh another amazing event about different topics write to us at events at ziki evaluated.com and this is our YouTube channel that uh you will see

this recording and you can also see the previous events that we've done yeah the playlist is called zkv presents and we have a lot of our previous ones there yes exactly and now I would like to introduce to the stage yourself Joseph if you could um yes I can see yourself already from informal okay let's go informal systems yourself as a first there we are fantastic okay the stage is yours are we doing slides yes yes we're doing slides

let's get them set up then I'm gonna bounce see you soon then let me find I'm going to show you yes good perfect so uh good this is the presentation I guess so so uh yeah thanks for for the invitation so I I'm here to talk about uh ABC I 2.0 because it opens up a couple of opportunities for for me but before that I need to do a couple of uh logistic

logistic remarks around Comet PFT so as you might know uh tandemic core will soon be archived and so the team that was behind in core is now behind Comet PFT uh we have here our new uh GitHub org and our new GitHub repo so uh the reason I tell this here because all the work that I'm going to talk about here you're going to find also on this on this Repository um the comet PFT is a forecast Dynamic core it's built around 10 domain consensus algorithm uh and we try to have like maximum compatibility so the version numbers uh are compatible and we are also allowing mixed networks so this

is the the current setup that's the current iteration and this is where you're going to find all the work I'm going to talk about today um so I'm going to talk about ABCI 2.0 give you a little bit of idea of what it is how you can use it uh how you should not use it and then wrap it up I guess I only have like 10 minutes on the side a little bit late but uh we'll manage to get there so ABCI stands for uh application blockchain interface uh that's the way how uh in Cosmos the application is uh is uh working to coordinating with with consensus it's built around a very standard State machine replication idea

uh in principle oops what we have here the transactions uh going to the main pool uh they are we are proposed to put into a a block they go through consensus and then uh once uh the validators have decided uh on the next block the block is sort of passed to the application and then uh you know we have here begin block that delivers transactions and block and commit so here where this happens this is what happens so at the end there's not much uh sort of interaction the application just takes the the transactions that are generated by consumers um which also means that there's not

much that the application designers can do to control consensus and control the outcome of consensus and this is what ABCI 2.0 is trying uh to address so that's basically the the new workflow that that we're having um so the whole thing starts with uh prepare proposal where consensus gives a list of transactions to the application and the application can then decide for example to reorder these these transactions or to get rid of some of those um so this is opening your upper course in your a lot of new applications and use cases then within consensus debilitators are going to look at these

uh proposals that have been compiled by duplication more closely and if they do so they call Process proposal and at this point the application can validate uh the the block it can make sure that the block has been in fact compiled according to the application rules so there is some application specific availability checks that could be done here that were not possible before so you can have guarantees for example that only valid transactions make it into into the block then consensus keeps up enrolling the Voting is is going on and when the validators are about to send out the votes they are going to call uh extend vote and ask the application for some

data to to piggyback on the on the vote message so that's a new way to get the data more quickly onto the chain uh and again this uh this information is verified by the by the validators so the validator receives the ball from someone else they call a verified volt extension it's again goes to the application and the application can can do some consistency checks there and then at the end we can have a finalized block and commit so what we see here is that there was a very uh it's now much more detailed and fine-grained control that the application has uh over consensus which means that the application can use

contains those in in much more much more ways but it can also misuse the consensus in much more ways uh and the application designer needs to be aware of that and of course there's more to apci but I don't want to talk about that today I want to focus on these features here um so why is it useful so for repair proposals since this is a in the Mev conference here what actually process proposal does it is dealing with Byzantine proposals so if the proposals are behaving badly uh according against the application what we can do here is with process proposal we can check whether the proposal is there but this also means we can deal with rational

proposals so in some sense process proposal will allow to regulate the mov for example if the application is decided to auction away a block space process proposal can check and make sure that the winner of the action actually got their their support in the in the block so there are certain things that that can be done here uh in other uh use case uh is that we find in in Celestia where basically the transactions are re-uh reformed so where the transactions with control and data come from the main pool and then improve this proposal uh they are separated uh the control data and the block data and

the the control and the data is is is separated um and uh yeah and we can you can use process proposal to uh to have some optimistic execution because the transactions are valid at this point and you can start executing uh for both extensions as I said before the use cases are oracles so you can get information quicker uh on the on on the Chain so for example you can use it for Price oracles and other oracles or you can use it for threshold descriptions so they both the extensions that you piggy pack on the roads are key shares and they are spread over the the the network here

the point here is it's an alternative to the sort of more standard way of transactions where you put transaction into main pool and to go through consensus so which means more extensions are faster World extension is simpler but they have bigger guarantees they don't go through the whole consensus so the only property roughly speaking that you have is that you get the two-third majority of the votes have verified extensions so there is no guarantees about agreement things like this you don't have but you have this property that yeah two-thirds of the extensions are verified and have been checked by the by the application as I said uh with uh with power comes responsibility so the problem here is

that in order to allow application specific uh validity checks for example and process proposal he says influence on consensus if the application says that this current proposal is not well formed then containers is not going to vote on on on this proposal or or it's putting against it so this means that the application has the power to to to to stop consensus has some power of influencing liveness which means that and we have formalized this here that if if a correct I uh the correct uh proposal proposes uh a block then process proposal must actually accept the block

so what this means roughly speaking is don't use it to say I don't like transactional learning so use it to say okay this transaction ordering is against the application this was a this behavior on the proposal side but sort of just trying to to change this in in our own uh sort of like what we like might have influenced some consensus likeness so this uh you should um similarly uh for for extend vote and verified both extensions we have similar similar properties so uh you cannot use it to say we don't like the data in the extension because again this will also uh potentially uh

have license properties uh lightness brought really induced by his properties problems and consensus so there are new powers that are given but uh but use them use them with care uh that's the message here so to summarize uh ABCI plus enables flexibility concurrency performance new ways how the application can can use consensus and interfere with it we can make sure that all transactions that make it on the on the Chain are really it has a couple of new use cases and I have only sketched two here in this in this talk or a couple of them uh it requires that the application is is well behaved so already in the original apci we required

the application to be deterministic uh and we also have seen problems with applications in in practice but now we have more properties uh on the application so make sure that this is satisfied so regarding our our roadmap so we're going to to bring apci 2.0 to commit the PFT uh Pro prepare and process purposes in the upcoming version 37 uh and this is ABCI 1.0 this is the what it just contains prepare and processed proposal by the vote extensions and finalize clock are coming into version or theorate also pretty soon uh here you

have to link to the specification if you want to have a little bit more detail uh just at the end I would like to to acknowledge that this is a big effort by a quite sizable group of people uh but I also knows his own Dave and sunny who proposed this idea uh see I show myself and tell them we're working on the specification of William Payne and CIA should be working on the implementation and there's a huge list of uh of people who contributed in many typically discussions over the past year and I think I'll stop my presentation here and perfect perfect on time thank you very much Joseph it was a very nice presentation okay so

next on stage I would like to um invite Magnus from skip protocol how do I look hey hey Dairy you can share your screen and let's start your presentation oh so cool um Awesome everything look good great uh hi everybody I'm Magnus um one of the co-founders of skip protocol and today I want to chat a little bit about you know one of these new modules that is coming out in

osmosis in the next upgrade called Proto rep and then also talking about some of the uh some of the future uh potential directions for protarev and also following that uh wonderful presentation earlier how a lot of the new features of the SDK can be applied so uh just to give a little bit of a background on uh Mev and osmosis a while ago one of our first things that we built as a team was MEPS satellite which is a dashboard to examine cyclical Arbitrage Med on osmosis so it measures basically transactions where uh the transaction ended up with more of the original asset that it started with we found out that you know as of a couple days ago uh total extracted Mev via this method hit over seven million dollars at

current osmo prices uh for osmosis um worth noting that there is a wide amount of Mev that is not captured here specifically a centralized exchange to decentralized exchange Arbitrage which anecdotally we know is quite large uh but this is sort of what on chain we were able to capture so uh as we sort of talk to the osmosis team and try to understand you know what kind of solution would make sense we found out that uh they were very strongly demanding an on-chain Mev solution so here are two uh uh pieces that were written by sunny and also Dev in terms of really wanting to opt for uh in protocol solutions that essentially diverge from things like PBS or you know off-chain Builders and seeing how far we

could push this idea of okay well what can we do on every validator in consensus so introducing proto-rev which was the the outcome uh of of those conversations it is an in protocol block building solution so it in houses the backgrounding Mev capture so going back to that graph before uh it captures all the cyclical Arbitrage itself within the protocol on every validator in consensus um one thing that's really cool is it has zero cost of capital it can borrow an infinite amount of capital to execute back running unlike any Searcher or off-chain Builder could um the reason it can do that is because it's actually built into the application and therefore is access to the modules to Mint and burn capital

it's also fully open source uh as I said it runs on each validator in consensus which means it has the property of uh a proposer can't sort of do their own thing right every validator has to agree in terms of how the transactions are processed which means that no validator can sort of go behind anyone else's back and you know try to get a better deal or anything like that the last thing is it's fully governance controlled because it's a module it has you know parameters because all the logic is Unchained uh the entire chain itself can sort of vote in terms of how distribution Works how the actual logic Works Etc um so this is just a little bit uh more detail in terms of you know how how it

works in practice so after every transaction is received and processed in the application uh so like every transaction the mempool that is there's an in protocol Arbitrage that checks a bunch of routes uh after that transaction and see sort of what are the most profitable backgrounds they can do to balance out the pools after that transaction worth noting that you know all of this uh Med Revenue was previously going back to Searchers so that graph I showed you before that was all to search none of that was captured by the protocol so this actually in houses according to our test you know 80 to 90 percent of that cyclical backgrounding Arbitrage and gives it back to the protocol in the way that that they choose so what is our goal more generally as

skip um well our goal is always to make Mev fully Sovereign and what that means is give uh give chains the maximum amount of choice they have in choosing their Mev solutions that work with their protocol this has been our fundamental thesis and the app chain World in terms of building out solutions that can be customized uh and you know basically tailored to the individual application which usually involves not building out for you know a generalized L1 and solutions that apply there so in that case it means basically full block building control so governance can decide exactly how blocks are built and how Mev is captured fully decentralized meaning there's no one single party we're building towards this it's

definitely a goal that you know we're working very hard on um it's fully transparent so you can see exactly what's going on so the code eventually should be open source and then it's also compatible with some kind of cross domain Mev worth noting that most cross domain is between uh decentralized and centralized exchanges but in the future we think this might change and uh in order to solve sort of the the crisis we have of fractured liquidity we believe their the solution should uh basically enable cross-domain mov and atomicity and things like that though that's a big research question that everybody's working towards so uh this is sort of a summary of the previous presentation but Cosmos is about to change for the better right uh

the application now has a much bigger say in terms of what proposals are valid and how blocks are built so um to note in ABCI plus plus non-proposing validators can verify block construction there's much deeper expressivity for fee and Mev markets because of that you can sort of encode more of the this logic inside the chain and then there's also data availability with vote extensions which actually has far-reaching impacts in terms of how you can run something like an auction so what is our goal over the next uh let's say couple months it's to generalize proterrev to become the first protocol owned Builder so right now all that protarap does is back run but what if it could run an auction or a

generalized auction what kinds of properties could it have that would rival a centralized Builder or an off-chain Builder and how close can we get to that with the different pieces of ABCI plus plus that are coming out this is really the focus of skip on osmosis and sort of our collaboration going forward so just to compare the the attributes of an off-chain system for capturing Mev versus a protocol owned Builder and this is not to say that off chain systems can't get better and I believe they will um I think there might be a presentation here that talks a lot about that but you know this is generally some things that we've seen in terms of how octane mechanisms have played out in ethereum and how we think protocol owned Builders uh can fix some of those things

so in an off-ching system you have Builder centralization right even in a system like PBS a really good Builder will capture more and more of the block space and because of that they start to capture more of the order flow and it becomes a self-reinforcing cycle that essentially makes them become dominant uh you saw this with flashbots early now I think you're seeing it with like Beaver build but there's a reinforcing cycle for an off-chain actor to become more entrenched in a protocol owned Builder there are no off-chain Builders it's fully invalidator and so there's not even a question of who can become centralized or who can't the entire protocol itself comes to consensus on how a block should be built and how Mev should be captured and all the logic for doing that is in the protocol itself

um another property of option systems is they're generally not OCA resistant so you saw this with PBS when PBS just you know fully went down during the FTX collapse um it's very hard to construct systems where there's not a better deal that can be had by working with an off-chain provider whereas in a protocol owned Builder it's enforced OCA resistance which means that it's impossible to sort of create a proposal that is not according to the rules of the protocol um option systems have opaque functionality of course right this is one of the Hallmarks of an off-chain Builder where they have better functionality than someone else or some sort of private IP if they're monetizing whereas in protocol own builder everything is open source it's fully

observable and inside the repo the actual chain there's some censorship concerns on off-chain systems uh right so we we've seen this extensively with PBS where you know a dominant Builder can also choose to censor which can be a difficult uh decision for a decentralized network whereas in a protocol owned Builders there's bft and forced inclusion so with vote extensions you can actually make sure that enough information is passed through and this applies not only to sort of like ofac but also applies to including bits which I think we'll talk about a little bit later um Outsource Logic for off-chain systems whereas full app Dev expressivity for protocol owned Builders right app chains can fully determine their mentals and exactly how they want their blocks to be

built but one thing to note is option systems do have specialized actors right so these are Builders become very good at doing what they do and a generalized system is it's sort of up in the air whether it can even compete right so there may be a sacrifice in terms of how much maximal nav can be extracted but because of the benefits of protocol own builder there may be situations especially for app chains where it's very defined functionality where it might make sense so what are some of the New Primitives that we need on chain to enable such a system well at a minimum we need an on-chain bundle type so in a protocol owned Builder you still have Searchers they're still submitting bundles and they want Atomic execution uh therefore

you need some way in the SDK to acknowledge that as a native bundle type on chain we can leverage prepare and process proposal for the auction mechanism meaning we can sort of Define the rules of how the bundles should be ordered or merged or sort of you know put together with other transactions in preparing process proposal and then the big thing is we can leverage vote extensions for privacy and credible auctions so with threshold encryption you can have a you know one of the first real commit reveal schemes to create a credible auction and then you also have the data availability from vote extensions to make sure that there's a at least bft resistant censorship guarantee around people

participating in the auctions you'll still have off-chain actors right there might be Searchers there might be simulators as a service the future there might be some kind of bundling you know off-chain system but because they don't decide the final ordering it's a much lower risk that they'll ever become entrenched so just to sort of round it out uh you know we we believe that Mev should fit uh in sort of this Cosmos feedback loop where validators respect chain Founders who optimize for the user experience of users who keep validators accountable right this is a very unique uh feedback loop that we don't see in ethereum where validators are commoditized and relatively Anonymous and don't really care about their users and chain

Founders have a much smaller say in terms of the overall experience and maybe you should sit in this it should be fully controlled fully Sovereign and sovereignty means choice so giving giving sort of app chain developers the maximum amount of choice they have in their MVP markets so just to round it off if your chain developer or want to build on-chain mbb Solutions and Cosmos this space is very early please reach out my telegram is Magmar 100 but we're also skip protocol on Twitter hope that was hope that was at least interesting that was very interesting and there's three I think three questions in the Q a session I would like to address them yeah so uh first one I see is any plans to expand into generalized strategies

rather than specifically back burning Arps hopefully that was answered by the uh the presentation yes um the we're you know this is this is a very early and difficult uh space but we're trying to sort of move proto-rev in this direction and that's what we consider to be a protocol or protocol own builder um curious how the background I go is updated through governance and the frequency of updates Magnus expects um so the the backgrounding algorithm uh of course the logic can be updated whenever needed but the most the most commonly updated thing would be the route that it uses um because it is an in protocol Builder and this is a limitation uh it can't consider every single route right therefore it has some heuristics in terms of what routes it considers but

those can be updated anytime and I expect that to be updated relatively frequently based off of feedback uh the 7M you mentioned at the beginning what is the time frame that was since osmosis's founding um so we started that sort of at the beginning of Osmosis is producing blocks and then we've measured that sort of on every block since in terms of only cyclical Arbitrage great thank you very much Magnus of course thank you and next on the stage I would like to introduce Sean from mechatic honey hey hey

how do I share my screen hold on went down share menu yeah open share menu exactly that's it perfect okay how's that yours okay I don't have any as many sports as a classical presentation so we'll keep it short and sweet um so hello my name uh perhaps on the co-founder of Mac Attack we are the Builders of um Zenith which is an off-chain Builder that is currently live uh on osmosis fmos Juno and some other chains and we want to talk about the potential for Builders or block Builders to become citizens so as we've heard in the past

um talk and Beyond Builders are a thing today which essentially optimize the construction of blocks and a particular off-chain Builders are essential to capture cross chain moves so anything that requires information that is off chain like sex decks or from other chains can be seen within this sort of umbrella of costing Mev which has to sort of be off chain so this especially in the internet of blockchains where we're living in this world of interoperability we believe that a lot of the revenue that's going to be used to secure change is going to be coming from caution a movie so it needs to be integrated in

some way right now the way it's done is with off-chain builders the problem with um off chain Builders right now is that it requires sort of custom unaudited software right so everyone who wants to see the Run skip or mechatec runs a patch version of tendermints right um which needs to stay up to date with every chain in which you operate another problem with off-chain Builders is it's never clear who is running them and what those Builders are contributing to the block so whether they're front running whether they're censoring um or doing any kind of Nefarious operation it's impossible to know and it's possible to know what validator is

working with them so in this way block Builders are unaccountable we believe that to be a problem so what do Builders look tomorrow look like tomorrow so what Mecca Tech is working on in collaboration with a bunch of other parties with input from many different chains is um a builder module and a builder module is going to provide sort of a core API defined between every Builder and every chain it's going to allow partial block construction which is going to be chain governed where a builder is going to contribute probably a subset of the block and not the entire one

and it's going to pay for that right through a chain government account so the distribution of the proceeds of off-chain block construction is going to go not between the Builder and the proposer but instead the the Builder and the chain and this could be used in many ways which we're going to talk about very briefly the most important contribution of the Builder module is that Builders are going to be accountable for actually the transactions that they contribute to the chain so the entire bundle whether it's three transactions whether it's top of block or whether it's the entire block is going to be sort of signed by the

Builder and controlled by the state machine so that means that chains are going to be able to Outsource a specification of the kind of block that they want constructed by Builders and be able to accept or reject that block Construction in consensus so if you if a chain only wants olfac blocks or non-ofac blocks it will be able to both specify and assert that preference at the consensus level so in this way block Builders are essentially going to evolve into this role of just optimizing specific parts of the block within the chains specifications and be part of the

overall Mev landscape probably in composition with other on-chain Solutions so of course this is a an ongoing process that we're doing in collaboration with the cosmos SDK we are building upon the work that Joseph mentioned with ABCI plus plus so obviously it's going to be integrated with prepare proposal and process proposal so there's some questions there but there are other more important questions that I think we should answer um as a community and those questions are what is the shape of the block that we want people to build how should the Builder be punished

if they build blocks outside that specification besides just missing the proposal and then how should payments be distributed so payment distribution is something that is particularly interest to mechatech as sort of contributors to public goods the goal has always been to to sort of fund core infrastructure but there's many other options right so one idea of like how the proceeds for Med should be used could be just to burn it right so all the auctions the proceeds of every auction goes into the zero address and becomes essentially like a subsidy to every osmo holder or whatever chain it operates on another option is for it to go to the community pool

a third option is for it to follow the exact same distribution and commission that stakers and validators share so it would essentially mean all of Mev that's captured from Cross chain would be just part of the security budget I don't think this is a question that Mecca Tech can answer alone so we want to put that question to you and that's why my presentation is so short thank you very much if you want to contact me directly I'm very interested in your thoughts perhaps at Mecca Tech otherwise I think we have some time for Q a we do indeed we have three minutes for the Q a so if there's any questions you

can put them in the chat everyone is in ferocious agreements there's one question I see and Magnus is also writing oh how should it be distributed

according to you Sean uh I like the dumbest Solutions so the dumbest solution would be just to follow the staking rewards um for now I don't think the revenue is that significance and that it's probably better to sort of develop the ecosystem as a whole um as wouldn't see any value right it would just make the chain more secure that's that's the that's the dumbest solution um another solution which is like the proto-rev module they're saying they should actually pull just pull the money and then decide how to spend it later um that's another idea I don't know how effective community pools are at spending money

so I'm kind of open to that so the way it's going to work in the um in the Builder module is that the payment distribution is going to be a call block that is defined by the chain the chain is going to implement a payment distribution function that is going to decide the Builder module is not going to decide to find oh to find cross chain Med uh so cross chain Med is like if transactions that originate on the cosmos Hub sort of expose some Alpha which could be crap captured on uh osmosis or say there's you know someone buys a million atoms on Crescent decks and we expect that the that's going to move the

price and that price is is eventually going to move on osmosis so that would be crushing me vegan I'm a single question am I missing questions yes still a few more in Q a oh sorry any plan to expand generalization that's not for me I don't see any questions in the Q a my questions how do off-chain Builders capture cross

chain Mev in and as chronicus environment and Cosmos is there liquidity risk they have to take on mostly x d e x coordination so the way they capture it is they um so off-chain Builders can essentially synchronize the block space to buy on multiple chains so they could coordinate because they're they're kind of like relayers right um and they do take on liquidity risk or inventory risk if they need to maintain sort of liquidity positions on multiple chains to do some kind of like if they're just market makers so if what do you say cross chain Mev if we simplify just say they're market makers then they have to like maintain liquidity uh on

on multiple chains to do that and that means that means risk where are these questions coming the last one what is the adoption of Zenit well we're moving everything behind the Builder module so it's nth is live on a couple chains with a bunch of different validators but what we really want is the representation of zenith to be available on chain so it's not like us declaring who uses Zenith it's that Zenith will sign every single every single bundle that it contributes to the chain okay let me check if there's any other I think that's it

cool thank you very much no more questions thank you too okay so the next person that I'm uh introducing to the stage is open from osmosis hello hello hello okay I'll just share let's start the presentation yeah awesome all right so perfect I'm going to uh present over the next 10 minutes or so uh an alternative model to thinking about

um mechanism design for Mev that's focused on execution risk um so my name's Alpin I'm a protocol engineer at osmosis uh put a lot of mental Cycles into this and like what's mainly motivated this uh this uh topic is just seeing people time and time again sort of speak past each other for not having sort of common ground to speak on and I my hope is that is that the sort of execution risk-based model can can bring people together and and be a useful way to reason about Med um so before we dive into that um there are a bunch of existing ways of sort of framing Mev especially for protocol design uh it's like the two

sort of main ones in the cosmos ecosystem are these sort of this atomicity focused one and this good versus bad both of them are actually yeah I I'll be at like a bit of a meme but like I think to their Merit I think they're quite good uh but they're insufficient in some key areas the the atomic versus non-atomic one uh kind of misses the point of Mev because it keeps the focus on a characteristic of Mev as opposed to you know it's it's uh emergent impact on uh participants such as the users protocols Searchers the good versus vitamin EV is a good abstraction but it obviously suffers from being a bit too vague um it has this vague notion of mitigating bad Mev that doesn't really

mean anything to anyone and uh makes it hard to sort of design mechanisms um around Mev uh so so start with like what are the properties of a useful framework for Mev uh I'll stand by I think uh it's important that it's not prescriptive about what is desirable or undesirable for uh in terms of types of Mev uh for the sake of being portable and also for the sake of sort of avoiding this this uh extremely frustrating Rabbit Hole of uh of you know debating what what this desirable form of NV is at the expense of uh you know what a good mechanism designed for uh for harnessing or controlling MVP might be um another one is that it should be

focused on at least what some participant in the system as opposed to some like technical characteristic of the Mev which is largely just not useful um and then I get you know perhaps most importantly needs to be uh easy to reason about the trade-offs this sort of like uh we can't shove under the rug this like notion of mitigation uh it's critical that we actually can can sort of understand what the impacts of our design decisions are it would be nice of course as well if we can capture existing systems and in this new framework um just just for the sake of making it easier for people to digest so the question that people always ask when uh when it's trying to reason about uh Mev is what is Mev uh I uh my claim

is that this is actually the wrong question uh the pertinent question is not sort of uh one of classification around Mev but rather uh it's one it's a control system view on Mev it's it how how do we harness uh this value um that that sort of flows through our system uh and then uh we can treat Mev as an abstraction in the same way that we might treat good or bad as an abstraction uh for the sake of reasoning about trade-offs um my my proposal is that is that execution risk is this fundamental axis along which we can reason about about these systems um and uh I would like to make a service so I don't hear that this is not necessarily A profound point I think we

all intuitively think about uh about um Mev in this way um except except making it explicit has has some great benefits um that I'll touch on in a second so first of all what is execution risk I I Define execution risk in this context as the risk of of an attempt at sort of Mev extraction that fails of course what's some cost uh and um yeah the there's some amazing properties of this sort of framing of execution risk one is that you know this sort of hints at how it might be useful for mechanism design but uh but it has this great correlation between sort of the increasing of execution risk uh and

uh the increasing cost uh for uh for the Searcher um it also sort of sidesteps this uh the super annoying question of like is Mev ever truly removed from the uh system or is it just shoved into some probabilistic stat or uh I think uh it's all captured by this model it kind of It kind of uh avoids that um that whole rabbit hole and of course it puts a Searcher uh the the focus on Searchers uh instead of the Mev um you know and uh each core developer might say that bad Mev is reorg based um I mean the a uh you know and call someone sort of app chain Dex developer might say sandwiches uh we don't really care right we care about how it affects

the Searcher uh which is really the prime Primal uh participant of of uh these systems I I'd also like to highlight that um if you really like dig into what are the what have been like the key Innovations around Mev uh mechanisms um and uh you'll you'll find very quickly that actually almost all of them fall on this axis of execution risk pushing it one way or the other uh for example flashbots as primary Innovation was reducing execution risk for sort of their definition of good Mev which which was sort of non-reorg MVP um to take a more graphical uh point on this like if we were to plot out this Axis or load a high execution risk you

know where might some of the things that are familiar with fall I would say like for example we can throw priority gas auctions somewhere along the street of high execution risk on the access we really need to you know spend there's a good chance that your your transactions will fail um flashbots bundles of course have uh have pushed um you know execution risk down for for the types of uh transactions that they support and then a great example of bad Mev being mitigated is reorgan me via on ethereum it's for V1 uh where uh where essentially uh whether you're a Searcher whether you're a a minor validator uh it is it is uh nearly it's all but

impossible to to land any Mev that's related to reworks and this is by Design um so the emergent design goal of this system uh or this framing is uh uh is basically these two points it's to decrease execution risk for good Mev and increase execution risk for bad Med uh this will make some people scream I'm keeping the abstractions of good and bad I actually think that they are useful for us to uh keep the focus on the mechanism um so if we were to sort of plot out all of these sort of good and bad Mev Types on this axis you can throw sandwiches liquidations arbs whatnot in there then the goal is essentially to make our mechanism design be uh be this

polarizing Force where we push the good Mev towards being super low execution risk and push the bad Mev towards super high execution risk and uh in some sense this is this is how we sort of uh achieve incentive compatibility in our in our protocols um of course the question then is how um very briefly you know there are lot of ways to do this but an example of like decreasing execution risk would of course be the flashbots bundle auctions uh something like what skip is working on or we'll I guess we'll be working on after ABCI plus plus with these topple block transaction auctions uh this notion of like synchronous block space for cross-chain Mev and in general any transition towards atomicity for

transactions decreases execution risk and we should be encouraging this and designing this into our systems for the desirable forms of Mev sort of positive someone's uh increasing execution risk uh will sort of includes all these privacy Solutions uh such as threshold decryption uh some of the work that penumbra's working on like falls under this category uh in general uh it this shift from Atomic to non-atomic uh Mev actually a tremendously increases execution risk because now you have to take on the sort of volatility exposure uh that that makes it very hard to uh to remain profitable uh in the same way that you might uh sort of talk with autonomy transactions and then of course you have all these batching and sort of

randomization based options as well we'll find that sort of like the properties of the execution risk model for Mev actually are that it is not prescriptive about what's good or bad you might recall this from earlier it is focused on the participants and not the Mev and it is quite easy to reason about the trade-offs and and importantly their their impact it also does encapsulate sort of these good bad and atomic non-atomic Notions quite cleanly um so uh thanks I'll stop there I do some extra slides if needed if we have time but um but I think this is uh I hope this is a sort of useful framing that um that will help us get get on Common Ground when we're discussing this uh personalized important topic of uh mechanism design around that maybe

who are perfectly on time so thank you very much I open I'm Gonna Leave You on the stage and I'm gonna introduce our next uh speakers panelists so yes Anna is here well from zkv and Zaki I think Zaki meets no introduction so yeah guys the stage is yours together exactly is he joining you see here hmm

it was here just a second ago I added him so hopefully everything works okay we'll give him a minute to get back here um Alpine I had as one of my first questions what is Mev but is now crossed out from our notes I have a better question hey zucky there you are how weird am I not late at all perfect you're just on time okay so I think we're gonna kick off our panel um I'm I think we probably don't need intros help and we just met you and

sucky well actually Zaki you just arrived maybe do do let us know who you are uh I'm ducky a long time builder in the cosmos ecosystem I've been working on this stuff since 2014. um so uh yeah that's basically me co-founder of similier nice various other things cool and will and I are co-founders of the ZK validator and as well as other things as well I do a podcast called zero knowledge I do CK hack CK Summit things that start with ZK we'll I don't know if you want to say yeah and uh as if you've added also ones that it is across quite a few of the cosmos

um chains Atmos uh agoric Cosmos uh osmosis and uh lots more coming in the future so um instead of my what is Mev question to kick us off I sort of want to take Sean somewhat answered that which was like when you talk about a cross-chain environment or a multi-chain environment but I do want to start with that sort of framing it's like how is Mev unique when you start to add these different chains and different networks is it different and I open maybe this is a bit to you because you had rejected my first question so the question is about um you know when we have uh it's like app chains and

in general environment how does how does the nature of MVP change I mean fundamentally it's still the same thing right we're just introducing um you know more potential sources of of uh I guess non-atomic Med until until we have some solutions for that uh and um I I think uh it gets much harder to track uh it becomes um you know the sort of nebulous notion of like what what actually is the value flowing through these systems uh but um but I think the um one thing that was mentioned in sort of uh Max's uh skip talk that I that I really agree with is uh it finally opens the door for this uh this uh this sort of category of Mev uh that that is uh analogous to the centralized exchange

decentralized exchange ARB but now it's across chains and now we can actually sort of keep it internal within our ecosystem we can harness it uh it lets us reason about these systems uh in a way that's much more um much more uh it's positive sum for protocols and Ozaki has some interesting uh takes on this as well uh he's done a lot of work with um through the scheduler stuff so so document go out with this okay I kind of lost what the question was why uh how is Mev unique in an IBC enabled Network when you start to go cross-chain well so right now IBC is to the best of my knowledge the only uh bridging protocol that has

permissionless free layers at scale um right now um you know lots of people are working on this uh axelr hyperlane like lots of other people um are working on this so it will expand the cross chain Meb so like the biggest the biggest thing right is like in a world where you have permission relayers the permissioned relayer uh has a lot of control over like you know Capital movement and all of the stuff and so like the Meb just like floats up into that layer right um in a world where you have permissionless layers now you have like you you kind of start imagining you end up with a cross chain and maybe supply chain that starts to feel like the cross chain Mev supply chain in like a single

blockchain where you have many different actors who can potentially um who can potentially and you get like this like evolving Marketplace of things and so you know one kind of uh um I guess one kind of Meb like that like we basically see a lot of today doesn't actually require any cross-chain messaging it's just about synchronous like time synchronization it's like oh you know the price of uh you know like let's say most of the liquidity for an asset is on binance the price of that asset move now moved on binance now everything now everything needs to be synchronized um against that and so what my my mental model is always like is you you can

think of cross-chain Mev as like ripples in a pond um my more nerdy mental model is always like light cones and like special relativity but like no one will know what I'm talking about so so ripples in a pond like a a a a like a pebble gets dropped into a pond these ripples travel outward and like the energy of the Ripple is like damn EV right it's like the cost of synchronization of because of an event and so IBC to a certain extent makes this more interesting because now you can pair so like you have forms of this which is just synchronization but now if you have Capital moving between chains or information about Capital like so

like I locked funds on this chain like that has Market impact as well and so there's also that synchronization cost and so IBC really opens that up foreign I think it's quite interesting also if you look at the context of let's say the entertaining ecosystem compared to ethereum actually we're we're super early on let's say in terms of like actual Mev that can be that can be captured um in The Interchange but equally uh there's it seems like a much richer array of solutions already something to develop I don't think that's that's not just because of IBC it's also because of the way the app chains can uh give a lot more flexibility around how uh these

Solutions can exist whereas in ethereum just because of the slightly more monolithic nature it is a little bit more prescriptive and therefore most of the designs have settled into one way so the fact that things like interchange scheduler versus um the protocol Revenue in osmosis and other things that all being like at this quite early stage being considered I think probably is due to some of the intrinsic Natures of like what this ecosystem is which is I think probably going to lead to ultimately like better solutions for every ecosystem well can I just expand off of that a little bit like I think the scheduler frequently gets misunderstood in a lot of ways like a capture mechanism for Meb whereas like

my read on what the scheduler is is the creation of a new kind of commodity block space that like doesn't exist today right now you have commodity block space um on individual chains and there's a defined way of buying commodity block space on an individual chain which is uh uh which you know one way of doing it is just like have a bunch of stake and then the other way is um is like some sort of API like flash Buffs where you have flashbots or like skips mad tender Mint or Zenith or all of these things are like hey like you can get this you can buy this commodity but there is no commodity of multi-chain box space right like that commodity

doesn't exist like certainly it it exists sort of coincidentally like you might be like oh like I'm the same validator on like these three chains so like I've created like I have created it but like in a no formal mechanism to create that commodity of like multi-chain block space exists and the whole point of the scheduler was to like create that command which like you need something like IBC to be able to like do that right because like you need to have like a common multi-chain protocol that can then be like fed into the block production mechanic mechanics that come and so like in Cosmos we have like you know everything with Comet bft will be able to support

the scheduler very easily and like so like many applications can then opt into supporting like the creation of this new commodity workspace so um maybe leading on from that why I mean maybe this is the output to start with like why would it change liposmosis choose to opt into the scheduler as opposed to developing I mean as is already happening like other ways of um maybe auctioning blogspace or capturing um revenue for itself my understanding of the the scheduler is lucky correct me if I'm wrong is that uh it's it's mainly for sort of these sort of ICS supported chains where um like osmosis would not really be in

scope for that right no um if that's not my perspective at least my perspective is the so there's two hypotheses about this one is so like and you know like I don't know there's like uh so like this is a conversation I have a lot but like so like the core thing is no one is trying to take away osmosis is like Sovereign ability to own its own box space osmosis can choose to sell what it wants to sell into the scheduler right but what let's say that like osmosis is block space and like priority

in that box space as a non-atomic unit okay like individual to osmosis is worth X my argument is that if you can compose some fraction of Osmosis block space with arbitrary other chains so like uh osmosis Crescent injective you know the list goes on right and they all offer they were all offered into this one atom one auction um the value just to osmosis of that space would be like 1.5 x right that's the argument and so no one is trying no one is suggesting that the scheduler needs to like decrease the

sovereignty of any chain the it's more that like it's the opportunity for Shane to like participate in the creation of this more valuable commodity that no chain can create by itself yeah this is a very interesting topic especially around like is there real value for for sort of synchronizing uh and selling this like block space across these different markets uh I think sort of the end state of this will be something like that um just because uh it I can't see a scenario where um like just from a general like protocol design standpoint we want to push this Mev towards being uh in the way that you describe Zaki uh more

Atomic uh sort of atomic Mev has these this amazing property that it's really easy to capture value from it it's very clear what the bounds of the uh of the Mev is uh where it starts where it ends uh and it's very easy to create competitive markets around it I think this is one thing that that sort of the scheduler is doing really well um for osmosis it's uh right now I think the focus is uh very much on um is very very much on one this sort of like what's going to happen on the osmosis chain on its own I think osmosis is already going to be generating a very large portion of Mev prior to cross-chain Mev being sort of a large market and then second I I do have this sort of inkling that

these top of block uh flashbot style auctions will actually capture a very large portion of this cross chain Mev albeit not atomically right but um but for instance I think things that are in scope for that will also be things like centralized exchange to to osmosis arbs uh where we're like that that's top of block um uh transaction will will have some value that can be captured by osmosis arbitrarily uh do do to due to sort of that priority um I'm not I'm not sure if uh uh if sort of like integrating directly with the schedulers like this this is not something that um that like I put too much mental thought into uh but but I I'm sure like it it'll it'll be on the

surf Horizon if uh if it makes sense for osmosis yeah um I want to do a little bit of a throwback to an earlier mitigation proposal so that this I I actually don't know if this is still on the roadmap if it's interesting but like you know a few I think a year ago or more than a year ago um we had a conversation on the show with sunny and Dave and we talked about sort of mitigation threshold decryption using cryptography um where like is that is it still is it happening or is it not happening yeah yeah of course of course it is uh I think um that the primary blocker for it has been a sort of ABCI plus plus

um that uh other than that I mean I think it's uh very very well specked out uh you know we're ready and like kicking to uh to get it through um and I think it will be actually cited as specifically threshold encryption as one of the uh one of the primary uh use cases of or like utilities of building on apps Civic infrastructure this is truly something that's not feasible to do in a general purpose environment uh you know I think actually a lot of like really interesting app chain based um Innovations have been blocked on this this uh uh this uh you know ABCI level um uh iteration

um you know top of block MFG auctions is another one um but uh you know in the meantime in the interim we have been working on on a number of other sort of mitigation strategies but um but yeah I mean that's uh that's very very you know high on the on the priority list um as soon as possible was there do you think that there is also any sort of social or governance block to this though like do you feel like there could be pushback you sort of say it's specced out but do people want to do this is there that don't threshold decryption It's actually an uh there are very few user side user level downsides to the threshold decryption uh I think it's um uh it's very unlikely that um that there will be some tremendous

governance pushed back towards this it's actually uh it's actually um a protection mechanism for users uh what we've actually observed is the exact opposite that people really really want this to get through so that they don't have to worry about um things like uh as much about about some some types of sort of exploited or extractive Mev uh of course there's always some sort of base base layer risk of like implementing uh I guess such major changes but um but at the end of the day uh I I think I think that's something that users want um so it sounds uh like pretty soon we're going to have uh the protocol Revenue module implemented and live and

initially Revenue won't be basically just be paused and put into like a pot and waiting to see how much it is before it's distributed in some way um in kind of your views what do you think are going to be the best ways to to use that uh for the osmosis ecosystem I I don't have a too strong of an opinion on this other than that I think given that the revenue will likely be uh quite small if it's distributed to everyone I do think that that there is um there's some Merit in sort of directing it to the community pool uh maybe to some sort of like to sort of

feed into things like our grunts program or or other sort of public type funding on osmosis uh I think my sort of hunch is that this will be the the most positive some approach for this uh although I mean I do see the point for like just just uh Distributing prorata to stakers as well although uh my my like soft vote would be to community pool foreign tax on on Traders essentially um something that kind of creates value back for them seems to make most sense as opposed to stakers in some arguments um but I guess it's it's a relatively small amount and so

yeah and also this is a very common like I think uh demonstrating that it's possible to distribute that value to to stakers is almost as good as actually Distributing it to stickers right like just as like something completely even unrelated to crypto like uh you know Berkshire Hathaway is like I don't think they've ever distributed a dividend right but like they're valued as though they could right it's like uh the capacity to distribute dividends is actually is actually sufficient um and uh and the reason I say it's more positive some is because when you keep that value in the ecosystem to your point well uh it actually you know grows the ecosystem and you can sort of get

these positive feedback uh Cycles wrong now there's a question of governance around like how is that distributed that's a separate discussion though but yeah I kind of want to ask uh so Sean asked in the chat I want to kind of bring this up I think it's a bit related to my earlier one but it's how much front running happens on this messes uh it's actually um like if you if you like go like block by block and look like it's actually shockingly little I think for now uh there um and this is not actually just for osmosis right like even in in general I think um like if you look at ethereum for example like small small swaps And Trades like tend to not really get uh get

um front run uh because it's not worth it um I think uh for on osmosis uh what we have seen is that sort of uh the uh I would say exploitative Mev or say like negative some Mev likes or sandwiches and uh and front runs in general uh are proportional with volume uh so as volume goes down roughly uh goes down uh as well um I do think that we will see sort of an uptick as more volatile assets or sort of launched and uh traded on osmosis uh because it's usually like the volatility that that forces people to increase their slippage sort of bounds and and also as a result get front run foreign

so I wanted to ask a little bit more around ABC I plus plus and I think multiple presentations earlier mentioned using aspects of it prepare proposal for example um but it'd be useful to have kind of a big picture uh sense for how you imagine this changing uh the way that I mean the Mev ecosystem evolves in different actions um a kind of longer term and what maybe what some of the implications are it's okay I answered a couple you want to go yeah I get I could absolutely take why ABC I plus plus is perhaps the most

important um Innovation and consensus going on right now um what has been most interesting to me has been the number of different papers that have come out after ABC I plus plus that have proposed Mev mitigations that can be implemented within the framework of ABC I post so um my favorite one has been um uh Elijah and a bunch of other people who I don't know personally so I can't remember who they are um uh uh uh uh proposed this whole thing about oh like if you want censorship resistant auctions you need to have uh

multi like uh multi like Mo like blocks in which no single proposer controlled the block right and so you know and that is an entire family of consensus algorithms but none of them have been very successful some of them actually even implemented in the blockchain context but none of them have been very successful uh in the blockchain context and it turns out you can get most of the properties most if not all of the properties of such a system um by using vote extensions which is an ABCI plus plus mechanism um so I I mean it has been a long frustrating wait um getting ABC I plus plus uh into the world uh and uh you know talk about you

know team turnover and like all of the challenges and having to rename the consensus engine and like you know it seems like every force in the universe has been arrayed against getting this out of the out the door uh but it is imminent um and it's amazing I mean it's useful for Stuff the other thing that's worth mentioning is it's just like has utility Beyond it may be mitigation but it just turns out like so many things you're like oh I want to have a I want to do have IBC packets that can uh that can like control whether or not you need a signature from a certain party on your top of block oh I can do that in ABC I plus plus oh I I want to have auctions but I don't want the proposer to be able

to censor uh more than one third of the voting powers contribution to the auction right I can do that with ABCI plus plus um you uh and we just keep finding more and more ways of do of like building a lot of the stuff that people are coming out with as like research proposals but like practically implementing it on like a production ready piece of software um so there are a few questions in the chat uh just following on from that um about sort of how imminent it is now to to be released and um what what might be like the remaining blockers if there are any or if it's now just like the the way has been cleared and it's it's uh

just a matter of time um it's been implemented yeah it's it's abcms plus is done it's right now we're doing the great Comet bft release rename and integration of the rename of comet bft into the cosmos SDK um which uh everyone is finding extremely emotional um and then the great um and then after that you will see uh the first comet bft release with pieces of ABC I plus plus and then subsequent that the full but all of these things are actually like trains that are running in parallel rather than like sequencing things because like the

code's all written it's actually been written for a while but like release management is hard and as anyone who's been watching outside of the development of genderbent the Release Train got broken last year um and still not unbroken yet but we're working on it fair enough um so I think wanted to ask another question um more around uh Mev in general in uh in the ecosystem and so we know like rough size now of let's say seven million dollars like we can see was captured on osmosis um and you know hopefully that's growing there's a there's this hypothesis that

there will be a lot more interchange Mev there's more chains more defy emerges um but it's still pretty early uh and I guess in some way a lot of these Solutions are kind of experimental now assuming that there will be a lot more deep activity and other sources of Mev emerging in the future um do we already have a sense of um what the future of you know what the future sources and um that they're going to be most important will be and maybe over the next year will there be any like things that are gonna really change that or bring a lot more Mev to ecosystem

um so things like lending protocols and um stable coins should be should like result in a large increase in the amount of crop like Mev period and cross-chain mov in addition to just increases in transaction volume um these are probably um the biggest potential sources of um and so you know I said this on zero knowledge podcasts and I'll say it again the cosmos ecosystem has not remotely recovered yet in terms of liquidity from the teraco apps we still have a long way to go but assuming that we are able to recover and get back to something like what we were you know and then and then

hopefully exceed the volumes that we saw during the terror of during the sort of uh anchor carry trade era like the amount of Mev in the ecosystem actually can will likely become quite large an important sort of additional point to this is that uh Mev that's generated is extremely non-linear like you can't like say like as we might be able to with uh swap fees for example like hey you know x uh percent increase in volume leads to X percent increase in Mev what we've seen time and time again is that Mev uh is stagnant and then it explosively grows and then it crashes and then it grows and it crashes and it grows and it's also notoriously hard to track uh

so we have to be thinking about designing sort of systems that that keep this in mind uh uh and if we don't we might end up like there's so many examples in in sort of other ecosystems where they've like finally hit sort of some stage a period of volatility or growth um and just like have been hemorrhaging cash to uh to um independent Searchers the the like famous example of this is what happens sort of in avalanche when they when they had their sort of Summer of growth with defy and for a very long time I think it was like the Avalanche Foundation just just straight up like denied the existence of Mev in their ecosystem and something on the order of like 200 to 300 million dollars of MV was like extracted by like I I believe

less than like 20 entities I I would uh speculate that it's probably single digit number of entities um it's a very much like in in sort of un uh supervised environment it's Winner Takes all uh it it it's extractive and exploitative to users uh so we have to think about these things and like even the seven million Mev actually is like not a very large amount uh but if you look at the inconsistency of it like a very uh massive portion of it happened during the Terra crash and I think any sort of a bet on sort of the growth of Mev in the cosmonauts ecosystem is essentially going to be a bet on uh the volatility of the cosmos ecosystem volatility of crypto as a space it's a pretty obvious bet to make we have to

keep these systems cool so I think we're getting close to time I do want to say to anyone listening if you have questions that you still want to ask put them in the chat because we're going to wrap up pretty soon um can you hear me okay am I coming in all right I've you all froze so I just want to make sure um but I I think I kind of wanted to to wrap on the topic of what else is new generally in osmosis since this is like you know this is the ZK validator put on our first osmosis event what else should we be looking out for just generally like yeah what's the topics what are the the themes that you see for the coming

year for the coming year well uh give you a little bit shorter term than that okay coming quarter uh yeah so so we're um we're going to be rolling out uh our implementation of concentrated liquidity uh very soon this is a uh we have a number of I think very uh amazing Innovations on top of it and a few that will come after the initial launch uh that that will align so finally uh some of the some of the properties that uh that Traders and market makers expect from centralized exchanges in the U.S of dexes uh I think they're they're a few sort of uh you know it's not surprising that some of these mechanisms weren't weren't sort of uncovered they're very

very sort of uh you know uh easy to miss uh but I think um you know uh osmosis team has done really good jobs for bringing together uh uh the next step of concentrated liquidity and and hopefully it will bring better prices higher uh and uh and um in general a bit more trading stability to the cosmos ecosystem after that you know hopefully uh we can we can sort of take a take a proper crack at threshold decryption uh although right now so we're all hands on deck uh focused on uh concentrated liquidity and what about you Zaki what do you see in the future of the osmosis the the future quarter we're not going to go further um so I mean

the civilian team has like put so much r d effort into Understanding God's trade liquidity so we're very excited to see it coming to the cosmos though Psalm vaults for some strategies for uh for IBC ecosystem is is still a ways away um uh from when we'll be ready to support that so we're very excited I think that's pretty exciting um in general and I think really is going to um I mean people are underestimating just like how much just like reducing the amount of idle liquidity means because right now you know osmosis token holders are just paying through the nose for liquidity right now um uh and I think that'll be important I

what are what's the what are the other things that I think in this quarter I think are particularly um I mean the other thing is like you know with Mars and the outposts and stuff like that right as like more you know right now osmosis has just meant one thing right it's just meant like lping and swapping right um and I really and you know I think that like and like largely defy on Cosmos has been lping and swapping um and this is this is continues this quarter is already and uh in 2023 we're really starting shift onto new behaviors and new user experiences nice

well I think that's a great wrap up for our uh event there's no questions in the chat so I think yeah that brings us to the end of our Mev focused first osmosis focused event thanks so much to both of you for coming on this panel and thanks will for co-hosting it with me co-moderating I don't know what this is but yeah thank you some thanks for having us yeah thanks guys see you later bye-bye