Hydranet (HDN) ⚡@TheHydranet
Hydranet - Decentralized Trading And MEV
Maximal Extractable Value (#MEV) represents the additional profit extracted by automated bots through the strategic insertion of transactions either before or after a trader’s submitted order is confirmed on the blockchain. This practice often results in traders incurring higher costs than initially anticipated, undermining the fairness of decentralized finance (DeFi) ecosystems.
1. Sandwich attacks as an example
Imagine placing an order on a conventional decentralized exchange (#DEX) such as Uniswap:
- Your order enters the mempool, awaiting confirmation on the blockchain
- Bots monitor the mempool for high-value trades
- These bots submit a competing transaction, intentionally paying higher gas fees to ensure their order is prioritized and confirmed ahead of yours.
- The bot’s transaction alters the asset’s price, adversely affecting the market conditions.
- Your own trade then executes at a less favorable price, effectively increasing your slippage
- The bots then capitalize on this price shift by selling after your trade, securing a profit at your expense.
2. What are the effects?
MEV bots create an unfair trading experience in DeFi, extracting value at the expense of unsuspecting users. This results in diminished trade execution quality, forcing traders to bear elevated costs.
Annually, MEV bots siphon millions of dollars from DeFi participants, posing a significant challenge to the integrity of decentralized markets.
Reflect on the experience of Changpeng @cz_binance Zhao (CZ), who recently shared his first encounter with a DEX. How much might he have lost to MEV bots during this initial foray? His thoughts and experience on this matter can be found here:
x.com/cz_binance/sta…
3. A Viable Solution: Hydranet’s Innovative Approach
The Hydranet WebDEX will address this issue by executing trades off-chain through state channel technology. By circumventing the mempool and the associated blockchain confirmation process, Hydranet ensures:
✅ Protection against frontrunning
✅ Elimination of backrunning
✅ Prevention of sandwich attacks
The technology behind our #WebDEX will guarantee equitable trade execution for all participants, offering a trading environment rooted in fairness and transparency.
4. The Future of Decentralized Trading is MEV-Free
Hydranet is committed to delivering a trustless and just trading experience where bots will be unable to exploit users for subventionized profit. DeFi should serve the interest of genuine traders, rather than enabling industry abuse. Our team is steadfast in its mission to realize this vision! 🫡
Are you prepared to embrace an MEV-free trading experience? Then stay tuned!
