The Dirty Secret of Solver Markets | Gregory Markou - ChainSafe

[Music] uh Hey everybody my name is Greg I'm the one of the co-founders at Sprinter and also chains saafe and going to talk to you a little bit today about solving but more from the solver Market side and kind of like the distribution and get into some statistics about like what's really happening behind the scenes a little bit about us so we're a solving team uh quite competitive we're in like top three top five cow swap on specifically on like more of the Exotic assets as well and we do a lot of cross-chain solving uh our our core focus is to basically build out tooling that we will be the number one consumers of and ensure that it can then be extended and used for other solvers we're trying to build things that have utility day one and you know can be extended to other participants as well uh with a big focus on ux on the research side so uh you know some quick things I'm not going to cover intense that's we can ignore that I just want to cover some like semantics on solving there's kind of like two main jobs that exist for a solver solvers typically do pathf finding or what you might hear commonly as like the solving portion of things uh that's the idea of routing you know a complex transaction whether it's through multiple you know different liquidity sources so you want you have token a like usdc and you want you know eth what's the best way to rout through multiple different pools to get it that's kind of like the idea of solving you're finding that path and then there's filling filling is the idea of simply just like fulfilling a transaction you know executing it it might mean you add your own liquidity it might mean you're using external liquidity um or just simply onchain liquidity those are like the two core jobs of solvers and fillers um some people have built businesses around the solving side so like a lii for example they do a lot of the actual you know what's the best route to do your action um other people like us provide like you know API access points so that you can get some of these routes privately on the filling side this is usually not something you see very often um as a service it's typically something that people just they offer out right so this is like people on some of the top platforms going and doing it uh and just fulfilling transactions for you um but let's talk about the markets cuz that's really what I want to hone in on here and kind of the discrep the dispares so if you're familiar with the b solving there's kind of like these are like the three top ones you've probably used in the last you know if you're on chain you probably use them pretty frequently un swap X cow swap across you know the top two do your you know cross chain do your swapping so you can get like better price protection Mev resistance things like that across you probably use as the default way to move your funds between two chains there are like 30 40 other amazing companies in here as well there's people like relay you know as I said lifi I'm not going to listen them all but they all facilitate the same ones um and we you know solve on a bunch of them as well and that's kind of our goals um that's Sprinter but what we need to start looking at is understanding so I just don't have the stuff on my screen uh is to understand like basically how this Market's been evolving in the last like year year and a half we've started to notice that the actual usage of swaps has really moved away from Front Ends um intent markets are starting to actually take over quite dramatically on the total usage here uh you can see that by the green so the green here is intent market so that's like the emergence of cow swap the emergence of these other ones they're starting to dominate because users are getting better price impact you know when you use cow swap you most of the time don't have to worry about Jared sandwiching you and that's a good thing right and a lot of the time you get Surplus a lot of solvers optimized to give you a surplus because they're in an auction trying to win the bid to get like one BPS from you because it's effectively a market maker game one BPS spread I like you know it's okay it's not that bad um and and and so these markets of Solly been like taking over what we're also starting to see is the intent bridging space and I think this is like the really interesting one because we're going to start to see this both grow dramatically in total Bridge Market but start to eclipse on the intense side it's really going to eclipse the rest of the bridges when we talk other Bridges I'm talking the message based ones this is like the mint and burn assets so like your layer zero oft your sockets those that like even hyperlane that go and mint and burn those assets between chains or canonical um intense are basically everything else that's your across your relay lit in just the last year alone we've literally like doubled multiple times you know month over month currently we're sitting at 35 to 4% of the total Bridge Market space is dominated by solving that's roughly about 7 to10 billion dollar a month moves every day over in tense um the remainder in the bridge Market space uh dollar value I don't know about today my stats are from like you know E3000 um and this is starting to grow dramatically and it's about to grow really hard with the rise of AA specifically account account abstraction adoption is sub 1% we're talking like very low adoption today but what's going to happen to to the entire Bridge Market is that pretty much every the max potential increase on intent is dictated is honestly going to be dictated by the account abstraction space if for every 1% the account abstraction market share grows there will be close to a full 1X uh increase on the total load of the intense space the reason for this is accounts like one balance the magic spends um that rely on these resource locks are fully uh fully required to have solvers to run through all their transactions and I can illustrate this really easily it'll be cheaper for a user to put their funds on an L2 and to have a solver deal with batching and other you know magic behind the scenes to facilitate the transfer of eth normal eth on the L1 from one address to another the 21k gas fee that it costs to do it on L1 will be cheaper to hold your funds in an L2 and to have someone else broker to have a solver actually broker that transfer for you it'll always be that way and it's going to move to that way and so the total load of this like space is of the intent cross chain space is going to quite literally eclipse the minute we see double- digit adoption post pectra probably in the fall we'll start to see the intent bridging space go up probably upwards you know Max load in the like maybe 100b monthly and that's not too crazy to think about when you think about that defi is like 150b monthly to begin with it's all going to grow with it together um but who's is actually doing the work and this is where things get kind of fun uh this is the these are the teams working on cow swap uh we're the one our our solver is called project Blanc um these are the active ones today um there's many amazing teams that like are activity solving uh and these teams in cow swap compete in in an auction they simply just are competing on the best price but when we start to see the distribution in cowap we see it's actually getting pretty good and I know this is kind of messy and hard to read but if you if you notice for the most part you see the big jagged lines there's lots of them that's a very healthy ratio that means that the competition's working it means that we're commoditizing solving solving is getting to the point at least on the amm side that we're get we're all finding very similar prices and we're getting users truly the best price because if it was only one you could assume either it's a lot of private liquidity or that there's really being dominated by a you know for the fact that nobody's actually sophisticated enough to actually pull this off and get users the prices they need it starts to get a bit hairy though when we start to look at Unis swap X the big big pink one this is winter mute um this is basically because they're able to funnel direct sex liquidity in um that's that's like fundamentally why but winter mute dominates you know on average like 40 70% you know depending on like the month the day um they they really own Unis swop X volume Unis swap X is also new and we can't like you know knock them too hard like it's going to get better but the auction mechanisms aren't the same cowos swap has a really nice competitive market they've done a lot of work on the auction we don't have the same thing in Unis swap now it starts to get let's let's get into cross chain where it gets even hairier what we're seeing here is the average input amount so the the denoted chart the higher it goes that's the higher amount the middle is 100k so 100K USD and what you're seeing is at the bottom how many seconds it takes to fill a cross-chain order and what you'll notice pretty there there's a few blips at the beginning this is because we have to wait for the block times on l2s you know a couple seconds to go by we get most of the low volume stuff in that's everything under 10k that the highest Mark is about 15K 60 seconds 90 seconds and 120 mean greater than so it's greater than 120 most of the volume that you do if you go anything over 10K it's not getting transferred you'll never have it land faster than that like 4 second window that all the these intent Bridges claim that you're going to get and there's a reason for it the distribution of who's actually doing your jobs uh what we're seeing is the line that is the number of Sol solvers participating in the auction given volume ranges so up to $10 to $100 we have the most amount of solvers competing because it's very cheap and very easy to fill and they're willing to like risk it for the biscuit you know but as we start to get anything over 10K it falls off and goes under 20 solvers and by the time you actually get to the 100K Mark we basically have two to three people filling we have three people filling all transfers and this is a cross data for what it's worth um they're the most leaning on giving us the addresses of who relay are everyone else it's a black box and usually one solver or two but let's double down a little bit more here we have the top three Rel layers in across we have relayer one one which is blue we should note this is the across relay run by the risk Labs team so this is basically saying if nobody fills the order they will just go and take it to make the protocol move and the problem persists you can see orders over 1K they are taking on a huge share and they continue to take on a huge share over 10K all the way upwards of 1 mil and we actually see the all is the really thin Gray Line so it basically everyone that tries to be competitive in the cross chain world basically is not competitive at all it's like really hard and what does this look like compared to cow swap right on cow Swap and Unis swap X we saw really good distribution we saw lots of people competing healthy and it really comes down to one thing ah and I'll tell you that one thing in a second um I get a lot of questions why is cow swap competitive because nerds love auctions and they love playing whack-a-mole amm are a sophisticated sop game of whack-a-mole you know our team internally at project Blanc they basically are always saying what the hell is copium capital doing today they stole our like route that we always win and they are going and analyzing their transactions for the next 6 hours to figure out what optimization they found and then we go and take it back and then two days later they take it back it's fun it's exciting they like it it's technical cross chain is not cross chain sucks cross chain you have to hold in ventory you have high revert risk because l2s you're competing on gas it's like the days of the keeper Bots and maker you know you're bidding on uh liquidations and you're just like out bidding out bidding out bidding out bidding until you actually land is the only one in the block settlement times most intent protocols will settle and repay you back anywhere from 10 minutes to an hour and some won't even do it until 7 days because you have to go through the canonical Bridge from the L2 back to the L1 meaning you're out inventory for a very very long time better yet most teams don't have an accounting team they don't have anybody doing delta neutral strategies like Futures and so when eth Wicked like what a, bucks down in the last like month we basically saw a lot of solvers nuke their profits for like three months and that's because they were just stuck holding the wrong asset for too long and that's cuz you have to make a bet what chain do I go on with what asset on what day at what hour because you have no idea that like you know uh blast just launched a new liquidity mining campaign and like it's just wbtc because that's what's hot you got to make the bets um orderflow is also King I'm running out of time uh um anyway uh six seconds at you know so one of the things we're doing a sprinter is to fix a lot of these problems on the crossing space and that's what we're going to be doing thank you I'm out of time