Thread by @3vLabs

How Sei order engine reduces MEV?
[#SeilorRabbithole series]

0/🧵 The “Seilor rabbit-hole series” is a deep-dive on the 3 major Innovation breakthroughs of @SeiNetwork
1. Native Order Matching
2. Market-based parallelization
3. Twin-Turbo Consensus
mirror.xyz/0x545eF29F027D…

1/ 🧵 Why MEV holds back Billions in liquidity?

“Maximal Extractable Value is the process of maximizing economic value from block production, by including, excluding, and changing the order of transactions in a block”.

2/ Front-running bots/validators are considered Bad MEV while liquidators/arbitrageurs are good and needed for a strong #DeFi economic model.

Sei is trying to minimize bad #MEV with frequent batch auctions (FBA) and maximize good MEV with an off-chain flash bots-style auction.

3/ Constant information asymmetry (front-running) and a lack of deep liquidity, are stopping next-generation DEXes from overthrowing CEXs and market makers from achieving on-chain capital efficiency.

4/ Market Makers prioritize speed, finality, and latency when parking their liquidity. Tighter spread updates from sub-second block times provide less risk of exploitation by HFTs.

How Sei Native hOMiE is achieving Front-running Protection?

5/ Order Matching Engines (OMEs) are your homies when it comes to matching ask and bid orders. Protocol speed (TPS and Finality) and torque (Throughput) depend on how good is your engine

Why Sei has a Ferrari engine?

- Sei’s OME is Native, meaning that order placement and matching can be used by any exchanges building on top of Sei infrastructure (“plug and play”).

- Sei’s OME uses Frequent Batch Auctioning (FBA) combined with Single Block Order Execution. 6/

7/ FBA can aggregate every single market order at the end of the block, then execute all orders at the same uniform clearing price.

Sei also collapses order placing and execution into one block for a faster trading experience.

8/ It doesn’t matter what’s the order of your transaction, you still going to have the same price as everyone that posted TXs during that block time (around 450 ms).

9/🏎️ Is Sei engine truly unique? Let’s compare it with Mercedes (@Injective_), McLaren (@ProjectSerum), and Aston Martin (@dYdX).

#Cosmos #IBC #Solana #dydx #Injective #sei #seinami #SeiWorldTour #IBCseilors

10/ #Sei has further main radical optimization set to upscale these OMEs, like Block parallelization, Native Price Oracle, and Transaction Order Bundling. More about it in the next [#SeilorRabbitHole series].

Drop a like and read the full article on mirror for further deep dive into order matching priority, FBA, and Sei Tx lifecycle.

mirror.xyz/0x545eF29F027D…

#Cosmos #IBC #Solana #dydx #Injective #sei #seinami #SeiWorldTour #IBCseilors