The Case for a Private Uniswap

The U.S. stock market was now a class system, rooted in speed, of haves and have-nots. The haves paid for nanoseconds; the have-nots had no idea that a nanosecond had value.

— Flash Boys: A Wall Street Revolt by Michael Lewis

This is the money game Michael Lewis depicts in his bestseller Flash Boys: A Wall Street Revolt. High-frequency traders use information edge to trade ahead of pending orders, which is known as front-running. Individual investors can hardly compete with professional traders with faster computer hardware, software, and data lines in a centralized system like Wall Street. So most of the time, they are the prey to be hunted.

Ethereum, the Dark Forest

“Dark Forest Theory” is from The Three-Body Problem,a reputed fiction novel by Chinese writer Liu Cixin.

A Transparent Gas War

The transparency of blockchain, together with the latency in executing orders, makes front-running easy. As a result, anyone can track other users’ pending transactions in the mempool and place their own transactions ahead with higher gas fees. This is called front-running, a major form of MEV attacks.

A lot of the money-making strategies were of the winner-take-all variety. When every player is trying to do the same thing, the player who gets all the money is the one whose computers can take in data and spit out the obvious response to it first.

—Flash Boys: A Wall Street Revolt by Michael Lewis

Though lucrative, frontrunning is not risk-free. More and more bots join the competition, but there is only one winner. In Wall Street’s game, speed is everything. But on Ethereum, miners who can reorder transactions within a block are at the top of the food chain. They can be the front-runner themselves or share the profit with front-runners.

MantaSwap, A Private AMM DEX

Dedicated to solving those problems caused by a lack of privacy in decentralized finance, Manta Network is ready to launch its first products, including a “private Uniswap” called MantaSwap.

References

Ethereum, Dark Forests and the Limits of Transparency

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