- The video discusses the concept of order flow auctions (OFAs) and their importance in the MEV (Miner Extractable Value) and DEX (Decentralized Exchange) space.
- OFAs involve auctioning off the right to interact with orders or transactions, with participants bidding for this opportunity.
- The episode explores various design decisions and considerations for OFAs, such as order types, permissioning, information sharing, and on-chain vs off-chain components.
- The discussion also touches on intents, which offer improvements over traditional transactions in OFAs.
- The guests from Uniswap X and Flashbots/Swap provide insights into their platforms and how they fit into the landscape of OFAs.
- The episode highlights the concern of centralization in the market and introduces Suave as a platform aiming to address this issue by decentralizing OFAs.

- The discussion is focused on the pros and cons of app-specific approaches versus more general approaches in the context of user experience and market size.
- The Uniswap X platform takes a specialized approach, focusing exclusively on swaps and improving the user experience in that area.
- They believe in specializing in what they are good at and addressing the current problems with swaps on-chain.
- The downside of the specialized approach is a smaller addressable market, but the upside is the ability to focus on doing one thing really well.
- There is a discussion about the boundaries of swaps and how different types of swap-related activities can be included or excluded.
- The importance of on-chain and decentralized components in DEXs is discussed, with Uniswap X currently having some off-chain elements for bootstrapping.
- The goal is to make the platform more decentralized in the future, but for now, there are practical considerations.
- Uniswap X is seen as an order format for signing intents, combining different types of order flow auctions.
- The use of off-chain RFQ (Request for Quote) is explained as a way to determine the starting price for the Dutch auction.

- The discussion revolves around the use of off-chain RFQ (Request for Quote) as a starting point for Dutch auctions.
- The RFQ system is used to obtain an accurate price quickly and efficiently.
- The off-chain RFQ liquidity is settled on-chain through a Dutch auction or by finding the best route on-chain.
- The current market structure aims to prioritize competitiveness over the number of market makers.
- The move towards using intents instead of Ethereum transactions is seen as essential for the future of decentralized exchanges.
- There is a concern about centralization in the MEV (Miner Extractable Value) supply chain and the need to balance decentralization and best execution for users.
- The discussion touches on the potential impact of private RPCs (Remote Procedure Calls) and their trade-off between centralization and extracting value.

- The speaker discusses the centralizing nature of private RPCs and centralized intent infrastructure.
- They believe that both private RPCs and centralized intent-based services are centralizing.
- The economic value flowing through these systems determines their level of centralization.
- In the future, centralized intent-based services may become more centralizing if they replace Ethereum transactions with intent-based transactions.
- Private RPCs may still be necessary, but their extractable value would be lower compared to centralized intent-based services.
- The speaker expresses concerns about both private RPCs and centralized intent-based services.
- They mention the use of Dutch auctions for price discovery on the blockchain.
- Dutch auctions are considered a suitable off-the-shelf solution for price discovery on-chain due to their gas efficiency and ability to perform other actions at the moment of completion.
- The speaker explains the design decisions behind the implementation of Dutch auctions and MevShare.
- They mention the importance of backward compatibility, MVVV redistribution, permissionless access for searchers, and decentralized block builders in the design of MevShare.
- Different types of auctions exist in the real world with varying parameters based on available information and timing.

- There are different types of auctions with varying parameters and information known at the time.
- Permissioning in auctions can lead to winner's curse and adverse selection.
- Collusion can occur in auctions, even with a large pool of bidders.
- Uniswap v3 launch saw collusion to keep prices down in auctions.
- Coordination and collusion occurred through the Flashbots Discord.
- The optimal number of participants in an auction may not be infinity.
- The timing of when information is revealed in an auction impacts pricing and value.
- Revealing information to all participants decreases the value of the information.
- Different auction types have different levels of information revealed.
- Auction extractable value is a term related to maximum extractable value.

- The discussion revolves around the concept of auction extractable value (AEV) and how to ensure neutral and fair auctions in a permissionless environment.
- Concerns are raised about the role of relays in order flow auctions and their potential to manipulate bids.
- The idea of using trusted execution environments (TEEs) to host credibly neutral auctions is discussed, with the example of the Suave platform.
- The shift towards intent-based transactions is seen as a more efficient and user-friendly approach, but the challenge is to avoid centralization of the MEV supply chain.
- The potential for cost savings and design improvements in MEV auctions is acknowledged.

- The discussion revolves around the concept of a world of intents and the potential impact on cross-chain interoperability.
- The use of intents could simplify the user experience by allowing them to express what they want and have a marketplace determine the best path.
- Intents could also enable interesting product experiences, such as using assets on one chain to pay for transactions on another.
- The challenges of creating a universal RPC within wallets are highlighted, and the benefits of intents in offering more flexibility and abstraction are discussed.
- The episode concludes with contact information for the guests and a mention of the value of focusing on simplicity and specific applications in auction design.

The video discusses the concept of order flow auctions (OFAs) in the MEV and DEX space. It explores various design decisions and considerations for OFAs, such as order types, permissioning, and on-chain vs off-chain components. The guests from Uniswap X and Flashbots/Swap provide insights into their platforms. The concern of centralization in the market is highlighted, with Suave aiming to address this issue. The discussion focuses on app-specific approaches versus more general approaches in terms of user experience and market size. The importance of on-chain and decentralized components in DEXs is discussed. The use of off-chain RFQ for Dutch auctions is explained. The move towards using intents instead of Ethereum transactions is seen as essential for decentralized exchanges. Concerns about centralization in the MEV supply chain and the impact of private RPCs are discussed. The design decisions behind Dutch auctions and MevShare are explained. Different types of auctions, permissioning, collusion, and information revelation are discussed. The concept of auction extractable value and fair auctions in a permissionless environment is explored. The potential use of trusted execution environments (TEEs) and the Suave platform is mentioned. The shift towards intent-based transactions and the challenges of MEV auctions are acknowledged. The potential impact of intents on cross-chain interoperability and user experience is discussed. The benefits of intents in offering flexibility and abstraction are highlighted. The importance of simplicity and specific applications in auction design is emphasized.

- Generalizing a problem can help identify similarities with problems in different domains
- A more general design like SWAV could provide more sources of order flow and access to liquidity
- There is a tension between on-chain and off-chain components in terms of centralization and decentralization
- Different solutions, such as consensus processes, trusted execution environments, and after-the-fact detection, can be used to host a credibly neutral auction
- Collusion-resistant infrastructure is difficult to achieve, but making markets more efficient can help mitigate collusion
- Winner's curse and adverse selection are challenges in common value auctions, and collusion can be a solution
- An anecdote about oil and gas companies going bankrupt due to winning bids without sophisticated pricing strategies is mentioned

- The speaker discusses the potential antitrust problems that could arise if bids are coordinated in a blockchain system.
- The irony is noted that blockchains, which are often used for coordination, can also be used for cheating.
- The role of law and reputation in blockchain systems is discussed, with the speaker emphasizing the need for some level of trust and deterrents like legal sanctions.
- The speaker acknowledges that reputation can sometimes fail and highlights the importance of minimizing trust in centralized crypto exchanges.
- The possibility of off-chain infrastructure becoming on-chain in the future is considered, drawing parallels to the decentralization trend in the crypto industry.
- The speaker sees markets as one of the most decentralized systems and emphasizes the importance of designing competitive markets for good outcomes.

- Generalizing a problem can help identify similarities with problems in different domains.
- A more general design like SWAV could provide more sources of order flow and access to liquidity.
- There is a tension between on-chain and off-chain components in terms of centralization and decentralization.
- Different solutions, such as consensus processes, trusted execution environments, and after-the-fact detection, can be used to host a credibly neutral auction.
- Collusion-resistant infrastructure is difficult to achieve, but making markets more efficient can help mitigate collusion.
- Winner's curse and adverse selection are challenges in common value auctions, and collusion can be a solution.
- An anecdote about oil and gas companies going bankrupt due to winning bids without sophisticated pricing strategies is mentioned.
- The potential antitrust problems that could arise if bids are coordinated in a blockchain system are discussed.
- The irony is noted that blockchains, which are often used for coordination, can also be used for cheating.
- The role of law and reputation in blockchain systems is discussed, emphasizing the need for trust and deterrents like legal sanctions.
- Reputation can sometimes fail, highlighting the importance of minimizing trust in centralized crypto exchanges.
- The possibility of off-chain infrastructure becoming on-chain in the future is considered, drawing parallels to the decentralization trend in the crypto industry.
- Markets are seen as highly decentralized systems, and designing competitive markets is emphasized for good outcomes.

Season 6 | Episode 4
In today's episode we are joined by Xin Wan, researcher at Uniswap Labs, and Robert Miller, Product Lead at Flashbots, to explore the world of Order Flow Auctions (OFAs). They discuss different OFA designs like Uniswap X, Flashbots MEV-Geth, and traditional order books, analyzing capital efficiency, fairness, and susceptibility to manipulation. Xin and Robert also detail key auction parameters around permissioning, bid selection, information revelation, and credible neutrality. Looking forward, they explore how OFAs and intent-based infrastructure could simplify cross-chain interoperability and abstract complexity for end users.
- -
Maverick Protocol is a DeFi infrastructure provider focused on increasing industry efficiency, powered by Maverick AMM. Maverick helps token projects, DAO treasuries, liquidity providers or anyone in DeFi shape their liquidity with efficiency and flexibility. In other words, Maverick makes your liquidity smarter. 

Shape liquidity for your token today on Maverick at https://app.mav.xyz/bellcurve  
- -
Timestamps:
(00:00) Introduction
(01:49) Interview Start: Xin and Robert
(02:26) What are Order Flow Auctions?
(08:33) Market Structure of Order Flow Auctions
(15:03) “Maverick Ad”
(16:17) Taking DEX Components Offchain
(23:22) Why Uniswap Chose an Offchain RFQ System
(28:01) The Role of Private RPCs
(32:32) Design Space for Auctions
(47:02) Price Impact of Information Availability
(55:33) Use case of Intents
(1:03:28) Outro 
- -
Follow Dan: https://twitter.com/danrobinson
Follow Mike: https://twitter.com/MikeIppolito_
Follow Xin: https://twitter.com/xin__wan
Follow Robert: https://twitter.com/bertcmiller

Subscribe on YouTube: https://bit.ly/3R1D1D9
Subscribe on Apple: https://apple.co/3pQTfmD
Subscribe on Spotify: https://spoti.fi/3cpKZXH
- -
Resources:
On the Design of MEV Marketplaces by Robert Miller
https://medium.com/flashbots/on-the-design-of-mev-marketplaces-8829bf897858
- -
Disclaimer: Nothing said on Bell Curve is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Mike, Jason, Michael, Vance and our guests may hold positions in the companies, funds, or projects discussed.

All right, everyone, welcome back to another episode of Bell Curve.

Before we jump in, quick disclaimer, the views expressed by my co-host today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with.

Nothing in the episode is construed or relied upon as financial, technical, tax, legal, or other advice.

Hey everyone, this episode is brought to you by Maverick Protocol, a suite of liquidity tools built around an innovative AMM.

Maverick helps token projects, Dow Treasuries, LPs, or basically anyone in DeFi shape their liquidity with efficiency and flexibility.

Stick around and you're going to be hearing about them more later.

Welcome back to another episode of Bell Curve.

Today, we are going to be talking about order flow auctions, and I am super pumped for this episode.

It's a very cool, sort of on the Venn diagram of MEV and DEXs that we've been talking about in the season.

Order flow auctions are squarely right in the middle of that.

So in this episode, we start from a high level just to find what order flow auctions are.

Then we go through some of the more nitty gritty designs that decisions such as the order types that they're designed for.

So more generic sort of broad-based order flow auctions are more app specific order flow auctions that might optimize for something like swaps, permissioning, so who is allowed to participate in the auction, the information that's shared, is it full info, partial info, when does that information get shared, and some of the more nitty gritty design decisions.

We talk about which components of the OFA should be on-chain versus off-chain and the centralizing impacts of that.

We talk about what it takes to run a credibly neutral auction.

And then finally, we move into intents and the improvement that intents have over transactions and the implications for how these OFAs are designed.

So this is a really great episode and without further ado, we'll just jump right in.

And today we're joined by Robert and Shin of Uniswap X and Flashbots slash Swap.

And my hope is that we're going to get deep into the weeds a little bit.

And we're going to be talking about order flow auctions or OFAs.

And I thought we could actually just start sort of with a 10,000 foot definition of how you view like what an order flow auction is.

Eventually we're going to delve deep into the design space, but maybe we could then sort of segue into where Uniswap X and Swap fit within that definition.

So maybe, Xin, I can pick on you to kick us off here.

Well, Order flow auctions to me, as the name suggests, just means when there is order flow.

And order flow is just, I guess, an array of orders, which right now typically means swaps, but it can also mean other things, transactions.

And there are participants in the market who assign value or positive value to these set of transactions or swaps.

And they have somehow a willingness to pay for the opportunity to interact with these orders.

And then the order flow auction is just the auction for them to bid on the opportunity to interact.

And then ideally, bidding with the proceeds of that auction typically going to the user who created the transaction or intent, or in some cases to the interface that originated it.

I think Generally, I think we think of OFAs, it's not about something like the MEV boost auction, where the proceeds of the MEV are going to ultimately the proposer of the block on-chain.

Although I don't know if others would disagree with that limitation of the definition.

But that's typically the kind of auction that determines what kind of math happens.

And ICO phase is kind of an escape valve for those.

I think that's a helpful way to slice it.

And there's a great piece on frontier research, sort of has a 2 by 2 of sort of like maybe swaps versus more general transactions and then execution, sort of like blocks based auctions.

But Robert, maybe I could pick on you here because Suave, I'd love to get your sense of, we were talking a little bit beforehand, you described Suave as a platform for OFAs.

So we all get the concept of an order flow auction, why order flow is valuable in the process of auctioning that off and returning that back to users.

But we'd love to get a sense because there's already this plethora of designs for order flow auctions.

And they all sort of serve different purposes.

So we'd love to just get your sort of sense of what the landscape looks like and where Swap fits, and then we can go down into some of the examples of some of the OFAs that exist today.

So I thought that what Shin and Dan laid out is a really helpful starting point for a discussion.

Orderflow auctions originally talked about this type of auction, which auction off the right to back run a user's transaction, and where the proceeds that auction we pay back to the user.

And so starting with specifically, you know, Ethereum transactions, it's most easily conceptualized in the context, context of a trade, where the trade generates some MEV, because it wasn't routed properly, and that MEV can be paid back to the user instead of just going to the miner, the validator instead.

Since the time that that idea of an order flow auction was generated, we have started to conceptualize other types of order flow options for more general forms of execution.

So I think Dan, you're referring to intents at some point where a user isn't making an Ethereum transaction specifically, but they're saying, hey, here is a signature saying I want to trade from USDC to ETH and please fill this in the best way possible.

Usually, they involve some form of competition among many different parties to give the users the best execution possible, which is where the auction part comes through.

And Flashbots has created 1 concrete order flow auction, which works specifically with transactions called MeshShare.

But in the last year, we've seen a huge explosion of different types of order flow auctions.

Ones that are more similar to MeshShare, so they're working with individual Ethereum transactions, but also order flow auctions which work with intents like Uniswap X, and I'm sure we'll get into details of that, or other RFQ-based systems, other types of intent execution systems.

And 1 of the things that we worry about here at FlashBots is that while we have really helped mitigate MEV by introducing these orderful auctions that pay MEV back to users, and that's a net good thing, we worry that we are centralizing the market in new places, largely like in these off-chain pieces of infrastructure that run these auctions.

And our answer to this new form of centralization in the market is Suave, which is a platform where developers can create the order flow auctions and other types of MEV infrastructure as smart contracts on a decentralized blockchain with built-in credibility and privacy.

I'm happy to get into the details of how that works, but at a high level, that's kind of how we think about overflow options at Flashbots and different types and the motivation behind Swab as a platform for OFAs and the problem that we're trying to address in the market, which is moving this infrastructure, which used to be a run on chain, off chain, and introducing a new vector of centralization.

I'm getting a little flashbacks to the MEV season we did with Hasu.

We used to talk about sort of centralization whack-a-mole, Which is sort of the game that you end up playing in MEV land.

But I would love to get a sense maybe because maybe we could start with sort of the most straightforward definition of an order flow auction where what we're talking about is just swaps, right?

I know Swab has a much more broad vision.

Uniswap X is pretty laser focused on swaps.

We'd love to get a sense for you guys, maybe just starting there.

We talk about order flow auctions as the ability to aggregate preferences, very nonspecific sort of arbitrary preferences.

How much of that do you see ultimately, like what's the sort of market share in between just swaps versus these sort of broad, more arbitrary preferences, maybe just to start out and how do you see that kind of shaking out?

Because I'd love to start digging into this dynamic of like more general order flow auctions versus app specific ones?

I think today, the majority of MED does come from swaps.

A large majority of it is either ARBs or sandwiches.

There's a small amount which is liquidations and a small amount which is just weird stuff that's happening on chain, which is kind of hard to quantify.

A bunch of NFT stuff, sometimes gaming, sometimes just odd things on chain.

And so to that end, like a OFA that addresses swaps is gonna address the majority of the market space.

I will say that it is not immediately clear to me that this is going to stay the same into the future.

I would expect swaps to be a very, very large and dominant and important category, but I think MEV finds a way and is oftentimes popping up in unexpected places.

As an example, there's a lot of MAD on front.tech, which kind of looks like swaps, but it is maybe can be conceptualized a little bit differently too.

And so who knows where it'll come in the future?

Maybe a gaming use case, maybe something else.

But today it is definitely the majority of MVV is coming from swaps, that is for sure.

Was there another part of your question, Michael, or did that address it?

I would just love to maybe, Shen, as sort of a more app-specific approach, which focuses exclusively on...

I'd just love to get a sense of the pros and cons for folks out there who are listening.

Maybe to be really overly simplistic, the way that I've sort of thought about it is, if it's app-specific, you can really tailor the user experience, as opposed to if you make it more general, then your total addressable market is much, much larger.

Right, just sort of broadly how I would classify the trade-off, but would love to get a sense from the 2 of you of like, you know, just as developers of the 2 different styles, like how you both think about it.

I might flip that around because in fact, again, I think like more than half of Navi, I would say, is DEX related.

So in some ways, actually, I think it's not necessarily the addressable market is a lot larger, but actually you do have a lot more power once you go to more general.

Yeah, I mean, I think by definition, if you take a more inclusive approach, Yeah, by definition, the addressable market is definitely larger.

I think the main reason that we have taken a very focused approach is just we believe that's what we specializing, that's what we are good at.

And like Uniswap for its history has always almost exclusively done swaps only, like we never try to branch out into lending or other like DeFi stuff, no stablecoin, no anything else, just swaps.

And so since right now there's so many MEV and other execution related problems with the way swaps happen on chain, I feel like Uniswap X is just a nice way to sort of improve the user experience here.

And right now, yes, maybe that's like more than half of the MEV problem, but you never know.

As Robert said, like maybe in the future, there's a ton more activities.

I think that's also a good scenario for me if in the future, crypto industry is way more than people swapping tokens.

But I think right now, we're still taking a somewhat more specialized approach, a smaller addressable market.

I think the upside is you can just focus on doing 1 thing really, really well.

So like there's only a few parameters that we have to think about, even though that's still a hard problem, but at least we don't have to consider, you know, like a hundred different corner cases when it comes to NFT minting or lending liquidations or like other kinds of activities.

I think 1 other interesting thing here and we'd be curious how you all think about this, Shan and Dan over on the Uniswap side of things is that you have a revealed preference for people to I think participate in some types of OFAs which are swap related but not in the way that you might immediately think.

And so there's like a type of market participant which wants to back run like someone who is adding liquidity for a new token, as an example, and is like willing to pay for the rights to do that.

And that is swap related, but it's not the OFA that you would design for something, something like that is not a competition just to fill the user at the best price because it's conditional on something else happening on chain or copy trading also.

So I think in some ways it like this question depends on where you draw the boundary of swap also.

Does that address the same type of swap as UniswapX?

So I was going to say, you know, I've been generally a partisan for let's try to solve this the simple version, the simpler version of the problem where it's just ordinary retail swappers just swapping with each other and with market makers.

So sort of a batch action or something more like Uniswap X, just because it's simpler and it's an example of a problem that is very large.

But I absolutely agree with Robert that 1 of the reasons, not only are there's a lot of really long tail stuff, but there's a lot of middle tail that is deeply entangled with swapping.

Swapping on on-chain exchanges, for example, something, doing that atomically with user orders, is where exactly does that fit in terms of, is that just pure swapping?

And then yeah, stuff like liquidation auctions, where things, often doing a lot of other complicated stuff on chain does involve a swap.

And so, yeah, I think we end up deep in MEV territory.

I know this is the DEX season and you've already had a MEV season that Robert's been on.

But I think we can focus on the DEX parts here, but I do think it really bleeds into the rest of MEV for sure.

And especially the point, like a huge part of that season as well was just the idea of returning MEV to users, which is, Robert, as you stated, sort of the explicit purpose of Vodafone auctions from your perspective.

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I would also be curious just because we've talked about this a little bit in past episodes, but you just mentioned sort of the on-chain, off-chain component.

I would be curious, 1 idea that we're sort of poking at for DEXs this season is which parts of a DEX are important to be completely on-chain and decentralized?

And which parts are we like, maybe actually this part of the DEX is more okay to be off-chain.

And would be curious to understand how you think about that from the perspective of order flow auctions, like which parts of an OFA need to be or should be on-chain and decentralized from your perspective.

And Dan, how do you think about what parts of Uniswap X to have on-chain?

I'm happy to start, and I'm sure Dan will have other thoughts after that.

So I think Uniswap X is a combination of a few things.

The protocol that was mostly described in the white paper is actually mostly on-chain, it's mostly about sort of the declining, the Dutch order that happens.

And then for us to like create a nice user experience and to correctly parameterize these orders, where to start the decay, how long it decays, where to end the decay, we have sort of, for now, attached a off-chain piece to the start of it, so that we ask a bunch of people, what's your best quote for this order?

And then using those quotes, we sort of say, OK, maybe this is where we should start.

And that's technically not part of the protocol itself.

And now it's sort of relied upon by the protocol to function.

So I think there's like an ideal world where everything is on chain and everything is permissionless and things go stuff to everyone.

But on the other hand, there's also a realistic version where we have to start something and we have to see if things work.

And we're definitely, things are on roadmap to make it more decentralized and more like the version that we envisioned.

But yeah, right now, just for real estate concerns, we have some off-chain pieces there.

well, I think of USUBX generally not as an order flow auction protocol or anything, but really it's an order format for signing intents.

As currently implemented, I think I see it as this amalgamation of 2 order flow auctions, 1 of which is a Dutch auction, 1 of which is a sealed bid first price auction that's run off-chain.

And I do think 1 of the reasons I do this sealed bid off-chain auction is because of just limitations of what you can do on-chain because of just the latency of over instantaneous somehow.

It might be a lot easier to get optimal price using the Dutch auction, as well as about some prioritization around, oh, how do we actually find

do we find the right starting price for a Dutch auction, which is a limitation that Dutch auctions have.

But yeah, I think there are other kinds of auctions that you could do.

And I think you could imagine a sealed bid batch auction, you could imagine a second price auction.

And all of these are, I think, ways that you can just generally do an auction here.

When combined with use of x, you can turn them into an order flow auction.

So why do you need a not-chain RFQ in order to choose where the starting price is?

Alternative would be just you could just pick a starting price, right?

Or maybe you could do something just based on looking on chain.

But what's the alternative for picking where you start a Dutch auction?

Why not use the top pool for a given pair on chain, or use like you all invested quite a bit at Uniswap in routing as an example.

So you certainly like have a perspective on like a price that you could execute a user's order on chain.

Yeah, well, more or less it does use that, but then as a fallback, as ultimately like if that's what it sets the price to if nobody's able to provide a price improvement on it.

I may be mischaracterizing a little bit there.

So I think that's whatever you can do on-chain, that's sort of the worst case, right?

And you only need this system if you can do better than what you can already do.

And also, I think to put things into context, we're working with basis point here.

We don't have 100 percent potential improvement and we just decay 1 point each second.

It's really you decay 1 or 2 basis points or maybe less than that.

I think it's important to get really accurate, really fast.

And that's why you sort of need this RFQ system.

Otherwise, you pick 1 point and you decay and no 1 takes your order and the next second or next block, you're way past your potential.

So you need some starting point and you're choosing an off-chain RFQ as a way to get a very accurate price, which you're worried about.

You need that because you need to decay that price over time and you want to just start at a place which is within reason, correct?

Yeah, ultimately, in order to get the best latency, you can.

Get the best price while still preserving latency.

You could just do a really slow Dutch auction with a low decay to get a pretty good rate, although you're still gonna have some imprecision due to the block latency.

And then, so you're using this auction RFQ to get a price And the only thing that happens on chain is essentially like the settlement of the user's intent.

All liquidity off chain or is like amalgamated by searchers on chain?

Well there's still the the doge auction that happens, right?

The first auction decides where the doge auction is going to start and end.

And then the Dogecoin happens and whoever fills it first, fills.

Yeah, I guess my point being that this like, this doesn't leverage just Uniswap LP pools.

It'll either take whatever the off-chain RFQ liquidity is and settle that way, or it'll take whatever your solvers find as the best route on-chain in the case that it's not filled through the off-chain RFQ.

It's not limited or partial to any particular pool or to on-chain Uniswap liquidity.

clear, in either case, people are free to use Uniswap liquidity.

As long as they're competitive, it's always, in fact, best to use it.

How did you how did you all think about the decision to put your flow through an off-chain RFQ first?

Because it's, I think, a pretty significant change to the market structure that you have.

A handful of market makers which get, as I understand, the first right to execute users' trades now, right?

They can go through the GDI and if someone gets a price improvement of, I think, a 1%, correct me if I'm wrong, then they can execute that.

But it is initially permission to like a smaller set.

So can you walk me through like what your considerations were and how you thought about moving to this market structure?

I think, first of all, It's definitely still in beta.

So as we try to roll this out, we're still onboarding these market makers.

But on the other hand, as you mentioned, there's a handful of them.

These handful of them are practically 100% of them.

If you look at the volume, the process and the competitiveness there are.

So I would say If your best interest or if your intent as the market structure designer is to get the best execution for your users, then what you really need is the competitiveness, not the numbers.

And so you have the best NBA team by putting together 5 players, not to just increase the number of players, but to have the 5 best players.

And I think, as I said, this is not exactly where we want it to be long-term, but I think it's a pretty good bootstrapping strategy just because it kind of suffices to have a handful of them that's very, very good.

And then we can think about how we can kind of open the gate to everyone who has the interest to compete in this system.

The way I'd put it, and I've talked about this with Mike in previous episodes, is that I think the essential imperative, in my view, is to move from transaction space to intent space, to move from orders that are coming from the Uniswap interface are meant to be executed on a specific pool using a specific route and are encoded as an Ethereum transaction.

Because an Ethereum transaction, as Robert will tell you, is not a very flexible thing.

It is hard to program around an Ethereum transaction.

It can't be bundled together with a bunch of other ones.

You can't do a lot of math necessarily on it.

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The Essential Guide to General and App-Specific Order Flow Auctions | Season 6 Episode 4