What the heck is MEV & why are Osmosis & Skip trying to capture it?

🧵👇🏻 (1/13) #OSMO Image
2. What is MEV?

•Maximal Extractable Value (MEV): the max value (not including block reward or gas fees) that can be obtained by changing the order of transactions in a block
3. But how can you change the order of transactions?

•The order in which transactions(TX) are processed in a new block depends on Gas Fees

•TXs with Higher gas fee=Higher Priority

•Thus, to change TX order, you can submit a TX with a higher gas fee & give yours priority Image
4. Why would someone do this?

•Simple Answer: Money

•Unfortunately, since profits can be made by reordering TXs, sometimes independent actors (Searchers) take advantage of every day users to make a profit. Lets look at an example 👇🏻
5. Sandwich Trading

•Imagine a Searcher runs a algorithm to find a unprocessed Large TX to buy OSMO

•Knowing this large order will raise price of OSMO, this person utilizes bots that auto submit a TX with a higher gas fee to buy OSMO right before the large TX & sell after Image
6. What are the effects of Sandwich Trading?

•The original user who submitted the large TX first gets a lot less OSMO than expected (Slippage)

•Sandwich Trading and Front running can cause higher gas prices for everyone and network congestion
7. However, there are good sources of MEV

•Liquidation: Buy collateral at a discount from unhealthy borrow positions. This ensures Lenders are paid back

•Arbitrage: Buy a token at low price on one DEX, sell high on another. This ensures Stable Prices

•more on arbitrage 👇🏻 Image
8. Enter @SkipProtocol Arbitrage

•Creating an on chain module that captures Arbitrage Opportunities on Osmosis

•Directs profits back to the community instead of leaving it concentrated in hands of a few Searchers

•Example of an arbitrage that turned 25 OSMO into 8k OSMO 👇🏻 Image
9. MEV Searchers have demonstrated that a massive market exists for Arbitrage

•Estimated $6.7M in historical revenue from arbitraging Osmosis Pools

•With Skip, current profit projections of 50-150k per month Image
10. How could these profits benefit Osmosis?

•Stakers & Validators: increase rewards to increase adoption

•Paying IBC relayer fees

•Osmosis DAO: used to fund future projects

•TX fee and Gas Refunds: reduce fees to bring Osmosis closer to a goal of a 0 fee DEX
11. Other Key Benefits

•Community will vote on how revenue is distributed

•Open Source Code: actions can be verified, no trust required

•Future Possibility of Skip to facilitate a Blockspace Auction for MEV not captured by the protocol
12. For full details go check out the proposal

13. If you are looking for educational content like this for Osmosis and all of Cosmos, make sure to join the Orbital Command Discord :)

Think about MEV capture on other chains outside of Osmosis. Yes, I mean Terra, Kujira, Juno, Sei. Check out 🧵 👆🏻


• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Deebs DeFi 🛰

Deebs DeFi 🛰 Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @Deebs_DeFi

Dec 24, 2022
Terra Weekly #24 ❄️

• A holiday mint, token gating, automated jobs & much more in the 🧵👇🏻

• Join the discord to discuss
👉🏻 discord.gg/MYV7SG9ztY

#Terra #Cosmos
2. @warp_protocol held a space with @Panterra0x & @vladjdk

• Warp is built not only for protocol devs to automate job execution but for everyday users

• Users (no coding experience) will be able to use templates to create on-chain jobs (DCA, limit orders, Arbitrage)
3. TFL updates Station’s staking page

• Shows a clearer display of validator information

• Randomized the order in which validators are listed
Read 17 tweets
Nov 4, 2022
Terra Weekly #17 🛰

•Interchain Alliance, A Pokemon, New Protocol

And much more in 🧵👇🏻
#TerraLuna #Cosmos
2. Do Kwon has a new vision for Cosmos Security: Interchain Alliances

👉🏻Stake LSDs from Larger Chains on Smaller/New Chains to help secure them

👉🏻Imagine staking $stATOM & earning $LUNA

👉🏻Also unveiled “Feather”- ecosystem tooling for new chains

•Full details in Forum 👇🏻
3. Want to learn more about Interchain Alliances?

•Check out an excellent thread by @lurkaroundfind
Read 27 tweets
Nov 2, 2022
Are LUNAtics and OSMOnauts ready for a future airdrop? 🪂

Read on to find out more👇🏻🧵(1/6)
2. Whitepaper indicates $ION will be airdropped to:
👉🏻 $UST holders/LPs on Osmosis before Crash
👉🏻OSMO Stakers
👉🏻ION/OSMO LP and ION Stakers
3. What is $ION?

• ION is 1 of a 3 token system by @_IONDAO

1) IBCX- An Index token fully collateralized by a basket of IBC Tokens

2) IOU-Overcollateralized Stablecoin, minted with IBC Index tokens as collateral

3) ION-Governance over IBC and IOU/ Value accruing Image
Read 6 tweets
Oct 28, 2022
Terra Weekly #16 🛰

•Blockchain Stories,
DeFi Hub, Refracting

And much more in 🧵👇🏻
#TerraLuna #Cosmos
2. Zodiac Protocol Testnet is now live!

•Refract your LP tokens into Yield & Principal Tokens

•Principal Tokens: investors acquire LP tokens at discount &hold until maturity date

•Yield Tokens: investors get a return from trading fees with no risk of Impermanent Loss
3.Speaking of Refraction, check out the sleuthing @cosmos_intern 👀

His findings & Speculations:

@riskharbor will give users liquid tokens as receipt for their insured tokens

•Users could then refract these receipt tokens into their Principal(p) and Yield (y) components
Read 29 tweets
Oct 28, 2022
Ever since I heard of @BackBone_Labs I’ve been grave-digging for Alpha

You won't believe what I found🪦

☠️A Privacy Mixer
☠️A Stablecoin Minter
☠️NFT Staking & New NFTs

And much more in 🧵👇🏻
2. Privacy Mixer 🔎

•All signs point towards @redacted_money adding bLUNA support/ integration with @BackBone_Labs

•Imagine being able to:

1)Stake $LUNA

2)Remain Liquid with $bLUNA

3)Preserve Privacy in every transaction

•All in one dashboard
3. A Stablecoin Minter 🪙

•Speaking of integrations, imagine a @capapult integration right into @BackBone_Labs 👀

•Take your $bLUNA and provide it as collateral to mint(borrow) $SOLID

• $SOLID will be the first decentralized stablecoin on Terra
Read 12 tweets
Oct 21, 2022
Terra Weekly #15 🛰

•Do Kwon Interview, Terra Expedition Program

And much more in 🧵👇🏻
#TerraLuna #Cosmos
2. REDACTED is live!

•Your on chain privacy solution is here

• Send $LUNA between wallets anonymously using Blade, the mixer Dapp

• $RED and Ronin NFT holders each recieve 50% of mixing fees
3. Laura Shin interviews @stablekwon

•My Takeaways:

-Laura asked tough but fair questions

-Apart from not revealing his location, Do gave clear & definitive answers

-Do is remorseful for those who were impacted & accepts responsibility

-Do wants to continue building 🔨
Read 26 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!


0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy


3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!