mev-toolkit

KeeperDAO provides the infrastructure to make DeFi more secure, profitable and egalitarian for users, protocols and Keepers through proliferating the Keeper Economy and negating the possibility of predatory MEV extraction on blockchains.

Core Products

Coordination Protocol

The Hiding Game

Gasless limit order system that sources liquidity from all means supported by KeeperDAO Keepers.
If a user's order creates a MEV opportunity, the user will be reward with a share of the MEV profits in the form of ROOK.

The Hiding Vault

A generalized liquidation-mitigation lending and borrowing NFT product.

The first platform supported by Hiding Vaults is Compound Finance.
Using a Hiding Vault mitigates both the risks and the impacts of the liquidation of users using Compound Finance.
If a user's position is liquidated, the user will be reimbursed with a share of the liquidation profits in the form of ROOK.

Liquidity Pools

KeeperDAO offer five single-asset LP that yield ROOK tokens (ETH, WETH, USDC, renBTC, and DAI): users earn ROOK rewards based on the number of ROOK rewards allocated to the pool each quarter.

MEV

How the blockchain works

Each block in the blockchain contains a list of transactions in a particular order, enconding a sequence of updates to the blockchain sate (world state).
Anyone can broadcast a transaction to the network, which means that the transaction is public. A broadcast is a request. In order for that request to be carried out, someone must place the transaction in a block and add the block to the blockchain.
Anyone can listen for transactions being broadcast and gather them into a list. In order to a turn a list into a block, it needs to be validated. Validation creats a mathematical (cryptographic) proof that the state changes are consistent.
In a proof-of-work blockchain, block producers are miners. In a proof-of-stake blockchain, they are validators.
The act of converting a transaction into a block is called settlement. The process of block production is called settlement layer or consensus layer.

Arbritage opportunity

Results from a difference in prices between the same asset, listed on different DEXes.
A transaction that makes the right swaps along the right arbritage route will end up with profit.

Keepers

Bots that observe Ethereum, and other blockchains, to faciliate sorts of transactions, such as arbitrage, liquidations, auctions.
Automated agents that survey the state of the blockchain and compute all the different possibilitie in order to identifty transactions that can create profit.
Once Keepers have identified a valuable transaction, they will broadcast that to the network. Other keepers can copy and broadcast the same transaction with themselves as the originators.
MEV arises from the problem of "how can a keeper ensure that they are the one who gets a transaction settled first?
Keepers compete with each other in a zero-sum game, transforming Ethereum into a highly zero-sum game.
Inside KeeperDAO, keepers don't need to compete - but coordinate and capture on-chain profits efficiently. DeFi users, protocols, market makers can bring their activity to KeeperDAO and gain a portion of the profits as a reward.

Maximal extractable value

Refers to profit that can be extracted from a transaction from the transaction originator needing priority or control over the ordering of that transacion in a block (the arbitrage has 45 WETH of MEV).
As may of 2021, around $3-4mil of MEV is being captured daily.
MEV exists on any blockchain and layers where there is a party responsible for transaction ordering (eg. validators, rollup providers).
Extracted MEV = Successful MEV transactions + Successful MEV transactions gas fees + Failed MEV transactions gas fees

➡️ While it seems simple, MEV poses risks not only to the user but also to the consensus layer itself. The reorganisation of blocks, the reordering of transactions, and — even momentarily — the censorship of transactions can have profound impacts on the blockchain and breaks the assumptions of many applications.

➡️ Because block producers are able to prioritize transactions with higher gas fees, a bidding war between bots (who either try to arbitrage or front-run) can occur. This hurts ordinary users and DeFi platforms, because these bidding wars drive up gas fees (Priority Gas Auctions) and cause slippage and failed transactions

MEV strategies

Common MEV strategies are front-running, back-running, and sandwiching.
MEV should accrue to the originator of the transaction, or of the transactions or protocols that create the MEV in the first place.
Using KeeperDAO's coordination layer, we can capture and recycle the MEV before it can be extracted.

Gas golfing

use addresss that start with a long string og zeroes (take less space, less gas, to store)
leaving small ERC-20 token balances in constracts since it cost more gas to initialize a storage slot then to update a storage slot

README.md

KeeperDAO notes