Herminator

The next AMM generation will likely be about MEV: Ideas as described here ethresear.ch/t/mev-capturin… allow AMMs to capture MOST OF THE MEV they are causing. This would generate new revenue for LPs and remove toxic mem-pool fights. 🧵

@koeppelmann With the gains in proving efficiency, the eth-community has two options: Spent more time one L1-proving (scale L1) or spent more time one L1-L2-proving (scale L1-L2 atomicity). Why is the second option the better one?

Not sure I have ever been as productive in my life as in the last ~10 weeks: An extremely challenging yet worthwhile goal. The crazy progress of AI coding and heavy use of it. A very small team, world-class skills, and now the ability to multiply output thanks to AI. The result is @etheconomiczone — with a live devnet already: eez.dev. What is this? It will be: a) A new rollup that is fully composable with Ethereum. This means you can do either cheap transactions on this chain that only interact with contracts on this rollup, or more expensive transactions (similar to L1 costs) that can interact in a fully composable way between L1 and L2. So, for example, if you trade on this rollup, the routing can dynamically decide to use only L2 liquidity for a small trade, or for a larger trade — where the extra gas costs are worth it — to use both L2 and L1 liquidity. b) A whole framework that will allow new rollups, as well as existing L2s and sidechains (yes @gnosischain!!) to integrate into this “(Ethereum) economic zone.” Imagine: one could make a trade today simultaneously using Ethereum liquidity, but also Arbitrum, Base, or all the other L2s. This is what EEZ will allow. Now, let’s talk about the tech: Essentially, there are two core concepts that make all of this possible: 1) Proxy contracts 2) Real-time proving 1) Proxy contracts are basically a way to overcome the challenge that ~99% of all contracts are written in a way that only deals with addresses from a single chain. For example, a token or an NFT can be sent to an address, but not to an address on a specific other chain. Proxy contracts fix this. An address “A” on chain “n” will get a deterministic proxy representation, “A*”, on all other chains. So now, if, for example, A is a DAO on Ethereum and it should control, say, a fee switch in contract D (a DEX) on another chain, this can easily be done by setting A* as the owner of D. A (the DAO), on the other hand, can now call D* (the proxy representation of the DEX contract D) on Ethereum. All the cross-chain message passing in between is abstracted away — the contracts just call another contract and do not realize it is actually on another chain. 2) Real-time proving The proxy design already addresses the problem that there is no widely supported cross-chain message-passing standard in EVM land. So it alone would already be helpful for asynchronous calls, or better, calls that do not expect or require a return value. However, this would still not quite bring us to “synchronous composability.” Imagine a DEX trade: you do the first part of the trade on L1 and the second part on L2. You want to know the result of the second part — and if it did not get you the expected amount, you want to be able to revert the first part. This requires the call that triggers the DEX trade on L2 to have a return value. This was long assumed to be impossible - but with real-time proving, it no longer is. Basically, because Ethereum blocks are only produced every 12 seconds (and this would still work with, say, 6 seconds), that is now long enough to build and prove the L2 block that contains, for example, this L1→L2 DEX trade. If you want to learn more, don’t miss the talk by @tw_tter and @jbaylina on Tuesday at @EthCC! Let’s make Ethereum ONE again!

@robinson Why is it okay to "remove the kyc" via this wrapping step for morpho? Seems like an legal loophole?

6/ Convert to wrapped token In order to use $ACRED within DeFi it needs to be wrapped into securitize's permissionless wrapper contract so you can utilize the asset. For this you need to sign a separate loan agreement. Updates coming soon to this to make it easier from what I understand.

What does institutional adoption actually look like today? Not institutions buying and holding crypto but issuing offchain assets -> onchain (RWA's) and utilizing them in DeFi End-to-End Private Credit Example 🧵 ..

Alexander Herrmann is in Cinema 6 presenting a new approach to auctions: Synchronized Priority Auctions. It’s all about MEV capture, trade execution, and syncing across AMMs. Built on “Priority is All You Need.”

@maxresnick @hasufl @Togbe0x @EdFelten Sooo, priority ordering(with 200ms blocks) is better for jump volatility and FCFS is better for diffusive volatility. How do we decide for each token, which one is better?

Volatility can be decomposed into diffusive and jump volatility. For diffusive volatility its best if the arb happens as soon as possible which is why FCFS race is nice for diffusive volatility (on centralized venues for spot an increase in diffusive volatility actually decreases the spread!).

@RadkoAlbrecht @Securitize @OndoFinance >Many tokenized assets require issuer KYC/AML, often due to securities regulations. This hurdle should be easy to take with uni hook + coinbase id nft, right? Why isn't anybody building this?

The big RWA <> DeFi disconnect? 🤔 Many tokenized assets require issuer KYC/AML, often due to securities regulations. This blocks them from truly permissionless DEX liquidity pools & forces investors onto gated platforms (like @Securitize or @OndoFinance), hindering wider adoption 🔒

#RWA tokenization holds immense promise – bringing stocks, bonds, real estate etc. on-chain for efficiency & access. BUT, the reality of easily investing in these via permissionless DEXs faces significant hurdles. Let's look at the friction points... 🧵

@dankrad @zengjiajun_eth Also, L2 leaders recognise the value of it! I am getting more and more convinced that this is a viable path!

@o_herminator @zengjiajun_eth I have always been for this but I don't believe it will fundamentally change market incentives. Would more people use Base if it had this? I don't think so.

Blob should only be allowed to be used by Based rollups. The rest, if they wanna use Ethereum, use it like any other apps.

@dankrad @zengjiajun_eth If I know that all my funds could got stuck, due to "execute"-bug, I would not use base. Even if it is unlikely. Right now I am only using base, because they will rescue me via their roll-up proxy pattern. But for rollups "stage 3", we need this security!

@dankrad @zengjiajun_eth To sum it up, one has to pay for a "forking service", the "ultimate security". @dankrad do you think this is viable?

@dankrad @zengjiajun_eth Your own "execute"-implementation, 1) could contain errors and is not protected by "forking" Ethereum 2) can not be updated without introducing attack-vectors. EXECUTE-precompile can be updated via Ethereum forking. (important for long lasting contracts on the L2 )

@barnabemonnot I wrote a whole post about it: ethresear.ch/t/fee-structur…

@barnabemonnot Great to have u working on it! What do you think about the idea of using the EXECUTE-precompile to charge L2 reasonable fees (more than computation costs) to improve ETH security budget?

Thought this was a good prompt to give an update on my own journey with rollup economics and validator incentives. These are top-of-mind topics for many in EF Research and out, framing it more from my own context here (thanks @francescoswiss for the shoutout!)

@dankrad @zengjiajun_eth I think its smarter to build a L2 fee mechanism around EXECUTE precompile rather on blob-data ones. See here: ethresear.ch/t/fee-structur…

@zengjiajun_eth So what happens if my rollup posts its data as calldata of a based rollup?

Congratulations to these devs for winning the @UniswapFND prize for their UHI4 hooks 👏 - MEV capture: @o_herminator - IVT AMM: @whoislewys - Detoxer: @web3yurii - Weth++: @SocksNFlops

@zack_bitcoin @dankrad yeah, its limiting! But the huge advantage is that the forkable tokens can be traded on ethereum(via the canonical bridge) and a trustless price between the forkable tokens can be created, creating a clear signal for the forkchoice.

@o_herminator @dankrad A layer 2 that you cannot put eth into sounds very limited. Using a derivative of eth inside the sidechain would be too costly.

You need to choose oracles very wisely: For many applications they have as much power as a custodial provider, so the risk is high. I would never trust an oracle that has clearly been abused. Reputation has to be earned.

@dankrad @zack_bitcoin I think the best strategy is to build a forkable L2 anchored in ethereum and deploy projects that need a secure oracle into that forkable L2: x.com/edmundedgar/st… but yes, it requires a community to build a whole new forkable ecosystem.

@zack_bitcoin Fork Ethereum?

@zack_bitcoin @dankrad Yes, enshrined oracles are fundamentally more secure. Here is another version of the same idea: x.com/edmundedgar/st…

@dankrad github.com/zack-bitcoin/a… I built this one in 2018.

@koeppelmann @safe Can we please also get a transaction verifier hosted on ENS? Like this one here: forum.safe.global/t/signed-trans…

These are the immediate security improvements the @safe team implemented when bringing back the UI. We're doing this transparently and believe there are many lessons to learn industry-wide. Links below 👇

Posted a proposal here: forum.safe.global/t/signed-trans… with a demo interface.

Such an UI for re-verification and re-simulation is simple and could be hosted by different providers or via ENS. "verification diversity" seems easier to build than "client diversity".

I agree! One extra feature that would help a lot is to allow for easy verification and re-simulation of the tx-payload that was signed by previous signers on an external website. Even a fully compromised backend/UI can not fake what has been signed to the external site!