Auctions, privacy and a cat - Quintus Kilbourn

foreign [Applause] [Music] from The Flash plus research team today I'm talking about auctions privacy and a cat and my motivation is um sort of to take this discussion about Mev and the discussion about Distributing a med back to users and grounded in like a mechanism or like a cross of mechanisms that people have been talking about implementing um and yeah and so the real Point part of the make is that the design space is bigger than we we realized and there's um much more to explore and and I'll sort of give a direction which we could uh go further but first like a brief a brief overview of what I what I mean when I say a mechanism for distribution okay so starting from Basics yeah the user tried to interact with the blockchain or blockchain in this case I just put ethereum up because it's easy to think of um right and so the user has some intent they're trying to something they're trying to accomplish on the Chain but they don't understand how the chain looks um most of us don't understand the intricacies of it and understand what the best way of of uh interacting with the like all the different small contractors etc etc um similarly the mempool is very uh they're hard to to boss many different transactions in there pretty much own like searches like a couple of like very like technical parties that actually I can reason about this um well in the time frame required so the user's confused uh not like me and you um and here the idea of auction comes in nicely I am just giving it my own definition which is a mechanism for prices coming through competition and then once you think about it for a little bit it doesn't have to be price Discovery it can just be Discovery you know um like in a reverse Ultra or something it doesn't have to be a price people are competing on um and that makes a lot of sense here because we actually need some Discovery because we don't actually know how to do what we're trying to do and so these sort of beautiful end case would be times magical auction in between the happy user and the blockchain and solve all of our problems and that's the direction we're going um what I'm deposing we go at least right and just to be clear when people hear auctions and any of the they think of PBS usually um that's not what I'm talking about right this PBS and search the Searcher like build a relationship and all these things um that's like it takes part of what you can do is like one large auction where the beneficiary is the proposal um but really like the um the mental model I'm working with is like a a an auction that logically precedes all of this where the benefactors um and of course like in implementation um this could these could be much more integrated um and you know maybe like if you really want to reason about this um perfectly then you should think of the whole system as a whole but for now we're just going to focus on the water flow auction um which is the green bong left if you haven't caught up yet um and so just to give you like a a rough idea I took a slide from a presentation against um with like one way one taxonomy you could give um breaking up the different um archetypes of of auctions and like this is really isn't like super rigorous and you can definitely propose a different way of dividing things up and and maybe it'll make more sense but just to give a rough idea you can add this code by on auctions which I just labeled here it's on priori where the winner is the terminal where in advance these kind of things um what I've called auction house because I don't have a better name for it but you know there's some official name um and there's actually different variations where people bid either like single items right and these items are gonna usually be like users intents right the um among other things but like it's it's the items are related to the user's intents because the user's trying to execute something chain and that's what we care about right um if you have combat oil auctions where people can bid on um you know subsets of of uh of items um and batch auctions or someone's somewhat of a continuation of this where the batch is fixed um you call it like pick and choose a subset um of course or some caveats and then Dutch auctions um and like I guess English options and whatnot all um a run of the time um so anyway so this is like one way of dividing things up and I've explainable to you and thank you for listening but that's all we're doing today um so the point I'm trying to make is that there's an argument oh so there's a dimension um that is missed in in this taxonomy um that is quite interesting and and that you know we should be thinking more about I think it's like a launch design space we haven't really explore much um let's cut like control over memory um what does that mean well we think about oh that's not good so they're supposed to be some little robots uh over there but I guess they're not showing uh I guess maybe it's because you're making your own quote anyway just imagine at the end of these bubbles there are a bunch of robots um uh the point I'm trying to make here is that um in an auction the idea is to communicate that an item is being sold to as many bidders as possible because we're trying to get up a competition and of course he they need to know about the item being sold to to bid on the item but I'm going to argue that this is actually not desirable and also not the only thing that we need to do necessarily oh the only thing that we can do to have this discovery through competition mechanism um oops Yeah so uh in order to do this I'm introducing another character or or I guess the first character in the story uh schroding is other cat right uh with half a sibling and expectation I guess um and again we have the same setting with the bidders which are now invisible but I promise they're there and um an item which is being auctioned over um but I'll introduce as well um a cat and a box and the the cat here acts as it acts as a um Auctioneer and the as you can tell by it's a hat and stick it is a magical cat and so the cat controls all of the actions taken in the box and more importantly it also controls the perimeter of the box so what this means is that the character control what information leaves and enters the Box so what can we do with this um and again you can't see it but there are a bunch of bidders outside the box I promise um and their Builders inside the box as well which you can't see um but the idea is basically that uh the cap can allow bidders to so Patrick emissaries copies of themselves right if we're talking about Bots or some some version like that that um that can put you the bidding on the auction for them and so the idea is that you inform all of these emissaries on the inside but not necessarily the like pillars on the outside what's happening at the auction if the boundary of the box is fully transparent the outcome is that at the end of the auction all of the bidders outside of the box are fully aware of um what transpired in the auction um what the item was perhaps even who won the item and what the largest bid was who knows but there's like um at the very least they're aware this item was optional um but this may not be desirable um and there's some other outcomes which we could have as well like for example we could have an outcome where only the winning bidder is aware of um the item which was auctioned off right and or going even further no one is aware of of who won the item until like some other point in the future and the actions taken on the item um or or taken within the Box um no let's say like abstract so to make it a bit more concrete um let's imagine we have a we're actually off a big trade someone's trading a very large amount of the ship coin they're going to move the price um they're like different variations of how we could do this but let's imagine we have some sort of RFQ system where bids come in the fall of like commitments to giving a certain price um and so these Emma series within the Box um or for the different prices um air and well what happens if the the barrier of the box has dropped out well at the end of the day the winning bidder now has to execute this order um but the knowledge of this order will be executed is now public or at least many entities are aware of it um and so there's competition to execute this order if they're going to move the price maybe some someone else is trying the prices in and it's not desirable it's one of like the best conditions for this for this bidder um and so they might actually want this information um they'll have to price in this competition when they give their bid um knowing that when they're trying to execute this order someone else might have already tried to price it in if we change the the setup so that only the window is aware um that they won the ocean earlier they only want to wear this bigger one needs to be executed and then the situation is much more favorable for them and that should mean that they are able to bit higher um but um let's imagine that dokon is actually swapping on you to swap our knee is asking to be background only you know that's like one of its conditions at the auction or maybe that's what the auctioneer wants um you know I'm leaving aside the question but it's actually like the setup well in this case the cat has no control over what's actually happening outside of the auctions so it's very hard to see if the bid is actually what the bid is going to do about the auction um however if the the outside um bottle bitter is never made a whale it's only made a way at some point in the future um what the article of the auction was and the action taken on on the order like the formation of the the bundle which the order is um executed happens inside of the box then the cat has control and we can make sure the bidding is like you know um along the like the lines uses utility function or whatever it is uh you know to put it like plain in this example there's no uh from joining good um similarly you can think of an oracle update um you can imagine many people are lined up for liquidations and the oracles are like on the cliff we don't know if it's they're gonna be liquidated or not um if the auction's running in the clear all of the bidders are aware of of um of the historical update whether the people being liquidated or not um but the um but only the winner is able to like background it for example um however if we make this barrier you know um less transplant um somewhere else on the permeability spectrum and only the Winner's aware of this they now have an incentive to bid more um for this information as well because it gives them an edge in the market they know something that their competitors don't their competing Traders don't um right and so I'm I'm running out of time so just to briefly go over like the the kind of thing that I covered here what we can do with information uh one is we can select for desirable competition competition that drives up Revenue but not competition not the you know is is uh detrimental to the users that yeah we use as wishes or their intent right um monetization of information theoretical example covers that quite clearly I think and then like control over the action taker information right I think if we have control over what happens inside of the box but not outside um if we can keep sense of information within the box then um we have um we can stock things that which we don't want from happening which we don't want to happen from happening um and I gave a very specific instantiation of of like the cap in the Box um but actually like the point I'm trying to make is that they you know we can combine mini boxes we can combine many cats um you can get dogs you can get on triangles you can get go crazy um my point is that there's like a lot we can do with privacy that um like how information flows and how we can draw things um the cryptography and distributed systems have allowed us to do and we haven't really like I don't think we've explored the full design space and so it'd be interesting to see what people come up with um yeah so that's why I always say it's not if you know you know you should ask yourself what action can I take on what information um and that's pretty much it um over time I think and so just uh highlighting a special course um a lot of homeless cats out there do your best to do I need to adopt cool I think that that's it um there we go awesome thank you uh we're still waiting for Danny to join and just our students yes so you get them you probably get one or two uh one of them that was lost is um how do you control information access your uh without leaking uh yeah so I think that actually the answer which I guess so here's like one very basic example you could just have a bunch of people submitting scripts which are like encode their bids or as you take as input the item you give us output the the bid and now they're running the server um and you know some trusted party calculates the bids for these people that's like one way of doing it um a lot of frost assumptions there and then you can scale up um like flashbots exploring the sgx route um either like one like you know Central uh a checks I don't you know a lot stronger I'm not going to talk about the cost assumptions there um but then um you know moving outside of that maybe you can have multiple parties running these checks just maybe you can have the bidders themselves running at different instances um I'll leave the answer there before I say something that doesn't make sense well that's perfect timing uh Dannon just joined in now uh so thank you again and we will go over to the next one