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Today together with @BalancerLabs we are sharing Balancer-Gnosis-Protocol (BGP) - protecting users from being exploited by MEV with batch auctions while remaining compatible with existing on-chain liquidity. A first version is live! Here is how it protects you from MEV:
In a perfect world, tokens that trade more than once per block should have the same price within that block. However today’s traders get rekt by miners & arbitrageurs who carefully order transactions within a block to manipulate prices (front- & backrunning, sandwiching, etc)
. @nansen_ai just today released a tool to check whether your address has been sandwiched in the past. So this is how the same concept as above looks with real world data:
BGP batches multiple trades per block and settles all of them at the same price. Ethereum is already batching transactions into discrete blocks so the notion of time-priority within a block is not meaningful.
At @gnosisPM we have been working on batch auctions for a long time. While our previous version had the big downside of competing against all Ethereum dex liquidity, it is a breakthrough of BGP to be able to tap into the liquidity of any onchain protocol within a batch settlement
“Coincidence of Wants” (Alice sells ETH for DAI, Bob sells DAI for ETH) match directly. Any excess is settled in the same tx with the best available AMM. The tx is sent by professional “solvers” which set tight slippage bounds and can use tools like #flashbots to avoid being 
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In BGP, users sign specific orders that miners can& #39;t directly include. Instead, bonded solvers are settling those transactions. Solvers compete with each other to achieve best prices for the user
In BGP, users sign specific orders that miners can& #39;t directly include. Instead, bonded solvers are settling those transactions. Solvers compete with each other to achieve best prices for the user
For traders, there are three main advantages:
1) Same or better prices than they get on other DEXs
2) Outsourcing tx management: No need to estimate gas prices yourself, no stuck txs, just offchain signatures. Submission fees in lieu of gas are only paid if the trade happens
1) Same or better prices than they get on other DEXs
2) Outsourcing tx management: No need to estimate gas prices yourself, no stuck txs, just offchain signatures. Submission fees in lieu of gas are only paid if the trade happens
3) Flexible Routing: Unlike other DEX aggregators, orders only specify a limit price - not a concrete execution plan. Therefore, as the optimal route changes through race conditions, solvers can still execute orders optimally
If you read this far, I probably don’t have to lure you further. But right now you can try out our proof of concept on mainnet almost for free (only some gas needed for approval). More info and the full announcement here: https://blog.gnosis.pm/introducing-gnosis-protocol-v2-and-balancer-gnosis-protocol-f693b2938ae4">https://blog.gnosis.pm/introduci...
En fin, a word of caution: Cow Swap is a proof of concept! While contracts have been peer reviewed they are not yet audited (bug bounty will start in two weeks). Use at your own risk and only with funds you are comfortable with: http://cowswap.exchange/ ">https://cowswap.exchange/">...
In addition, at the moment CowSwap is only settling trades against @Uniswap. In ~2 months we will support all liquidity sources and be particularly gas-efficient with @BalancerLabs v2 pools
