Exploring Auction Mechanisms in Protocol Design by Terence | Devcon SEA

[Music] well first of all thank you Julian for the wonderful talk I think it's a nice segue to what I'm going to talk about so um disclaimer I am just an engineer I'm not an economist I'm not an outr theorist so this is based on my intuition basically but yeah let's see let's see how it goes so I guess this was originally supposed to be a 20 minutes talk but at the end we shorten into five minutes so I'm trying to try to speed run it as fast as possible but I guess the high level I want to cover is that of the what how and why of different um auction design in protocol today and I want to make some specific implication of like different protocol within each option so basically we we'll do some case study so so today we'll look at layer one and then we'll look at Layer Two so layer one we'll look at mbb Boost we'll look at EIP 7732 and then we'll look at EA and ET alance and then on the l two side we'll look at first conf first serve part uh PG and then time boost so uh for each category we like we will look at what is being exchange like who is facilitating The Exchange and then we'll look at who captures the profit and then we'll look at when the auction conclude and reveal right so for M boost is what we known today right and then if I'm Alice wants to um build a block block through Bob the Builder I have to go through the relayer and that is autop political trust and this is what we have today and then another thing is that it doesn't scale long term because of every one plays timing game these days because of that this creates further friction for further updates that P do and fossil and then moving forwards that we have EIP 7732 and then this changes the trust assumption therefore you only need to trust the protocol the protocol guarantees unconditional payment and it guarantees Builder safety and then even within 7732 there are different designs such as block auction and Slot auction and each of them have like different tradeoff for example like for Block auction you could have like a DA problem because of the hash gets committed first but then the six Saturns it gets revealed nothing gets revealed you may have a cancellation problem as well for example if the build commits to something and then the price goes over the water and just doesn't reveal right and then slot aution has its own problem slot auction's problem such as that like you have to try uh if you slot aution that you may have an advantage by using the relayer and then but then at the same time there probably is less transaction inclusion time so here almostly trade-off space that like between 7732 that like it's probably worth thinking more on like the comparison between slot auction and and the block auction then there is EA and ET so both EIP 772 block aution and Slot auction consist of like a timing game which is possible but then the idea of EA is that instead of like just in time for the slot off you essentially uh do the AL that's further ahead of time this is to reduce timing game and then for et basically instead of proposer choosing the Builder you have this protocol that essentially issues the tickets and then because of that you can enable like me burn type of design but that also opens like concerns about about like multislot mvv so finally like let's jump from layer one to layer two right so today layer TOS there are even different alra mechanism and then most of them are conducted through a centralized sequencer and that is easy in a way that sequencer is trusted so you have this private Mano guarantee and then it's straight for forward to reason about and then you can do do this very fast because like users love the US of like Fast confirmation right and then who collects The Profit typically it's the company that's operating the sequencer or it's the Dow depends on how like decentralized that uh like basically basically how decentralized the layer two is and then within different like op of layer two there are first conf first serve there are PGA and there are time boost and we think and then basically like within each auction there are imp implications on how it affects developers steps and stuff like that and ux so I guess like the takeaway here is that like the AL design is like such like fascinating space it's such a profound space he he basically relies Engineers to work closely with mechanics and designer with like game theorist with with like with the economists and many more so yeah if anyone is interested in this type of design like please talk to Rick please talk to like people and yeah thank you thank you very much um so now for a few questions please raise your hand if you have any question no question okay well thank you very much