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There are actually some insane advancements coming out in the form of zero-knowledge order books, Dusk Network being the most well known. It essentially removes

There are actually some insane advancements coming out in the form of zero-knowledge order books, Dusk Network being the most well known. It essentially removes frontrunning as a possibility because buyers and sellers are matched using ZK proofs, but are not able to see any orders before they are matched.

throwaway82652 5y ago
That sounds good for any kind of HFT platform matching buyers and sellers. I don't see how that is an "insane advancement" or has anything to do with blockchains.
- pazimzadeh 5y ago
  Because the miner wouldn't be able to see the order book?..
  - throwaway82652 5y ago
    Sure, if you care about HFT you probably want the same guarantee to apply to any market maker, not just ones who operate on blockchains. Unless I missed something here.
jkhdigital 5y ago
The real question here is not whether one can design a market that prevents bad behavior, but whether any of the major players will ever bother using it. If the “little guy” is always on the losing end of market shenanigans, then market makers will never have an incentive to move their liquidity to the “fair” market.
- pcthrowaway 5y ago
  The "little guy" is always at a disadvantage in capitalism (or small business, or mom & pop shop) I suspect there's a disconnect between people talking about democratization of access, and people pointing out crypto doesn't actually make things fair. Crypto doesn't make things fair for the little guy. It does add additional transparency to financial markets though, as well as things like open, verifiable, non-custodial, programmable financial contracts (as long as all the inputs can be verified reliably on-chain) This gives people equal access (with some limitations on what that means)
  - throwaway82652 5y ago
    >It does add additional transparency to financial markets though No, not really. This comment is more crypto myth-building. There's nothing technical about blockchains that adds transparency. Any company that wants to publish all its financial statements publicly can technically already do so and could always do so. They don't for many reasons, the most important ones being that customers overwhelmingly want financial privacy, and financial companies are required by law to provide a certain level of privacy for customers. >open, verifiable, non-custodial, programmable financial contracts No, smart contracts are technically not "contracts" in the legal sense and are also not "non-custodial" because they require middlemen to run the blockchain. There is also nothing more open or verifiable about smart contracts compared to any other program. They're just programs. I absolutely hate that they used the name "smart contract" for this because it's so misleading. >as long as all the inputs can be verified reliably on-chain This will never happen because the only reason they're useful is because they take inputs from off the chain. The marketing is that users will be able to actually use these things to perform services. Of course that is self-contradictory because of the previous reason. >This gives people equal access No it doesn't, because only a small fraction of people are going to become smart contract programmers or are going to become skilled in auditing smart contracts. You might as well say all finance gives people equal access because anyone can become a CPA.
    - mw888 5y ago
      1. Saying that transparency isn’t desired does not refuse his point. Not only that but the off topic declaration where you imply privacy is impossible on blockchain is incorrect. 2. Miners and block verifiers are not middle men. They have negligible control where as a middle man has full control. 3. The verifiably of smart contracts is not exceptional for its own sake, but for the fact that it prevents cheating in a system where cheating is heavily incentivized. 4. Auditing smart contracts will generally be much easier than auditing EVM bytecode. Ethereum isn’t the only game in town and the most sophisticated layer 1 smart contract languages converge toward functional, locked down languages which lend themselves to automated and manual auditing. The same way open source increases user security even though 99% percent of users won’t build or read its code. You are so off base on all of your point I seriously doubt you don’t have an emotional stake in your position. Perhaps the classic “I’m a smart tech person yet I missed out, so really it’s always been bad and I’ll be proven right someday,” syndrome. You know other people that missed out simply developed some grace, and others still that identified problems went to work on them rather than pretending they were unsolvable. The dogmatic crypto skeptic is as bad as the crypto shill.
polygamous_bat 5y ago
So, the blockchain bros have reinvented... dark pools, which has been around since 1979? Because that's what you just described.
- CryptoPunk 5y ago
  Dark pools rely on the operator being trustworthy. Distributed encryption relies only on cryptography and the validator set being too large, and costly to join, to allow cooption, and both assumptions are highly trustworthy.
  - spopejoy 5y ago
    Even if this is true, it is still just a dark pool, which is trivial to game. One ping is all you need. I think the race to put order books on blockchain is misguided. Constant-product DEXes can offer way less gameable best-execution by simply trading more cautiously for the swapper. Problem is, on Ethereum, gas makes it too expensive _not to trade_ once you get to the blockchain. MEV is a problem that can be managed effectively if the blockchain is scalable (thus avoiding gas problems).
    - CryptoPunk 5y ago
      >>Even if this is true, it is still just a dark pool, which is trivial to game. One ping is all you need. If that's true, then you're right. Assuming an effective decentralized dark pool, that is not vulnerable to side-channel attacks, is possible, it is preferrable to the centralized variety that traditional finance uses. >>Constant-product DEXes What is a constant-product DEX?
      - spopejoy 5y ago
        > it is preferrable to the centralized variety that traditional finance uses Citation needed :) . Seriously, crypto needs to do better than just assert that ownerless decentralization is instantly better. Traditional dark pools work just fine once you accept that with the right model, a single fill can tell you loads about the order book. > What is a constant-product DEX? That's the model used by Uniswap and almost every other major swap-based DEX. MEV as described in the TFA is preying largely on these DEXes and people conclude that it's the fault of the constant product model, or of being transparent. It's not: it's the fault of gas making it impossibly expensive to use the most basic tool in execution, splitting your order into smaller trades and applying logic to when you choose to trade. I'm actually kind of a constant-product maximalist because it shows you CAN have a public, transparent market, which is something genuinely new to finance. IMO the last thing the world needs are old-fashioned order books and dark pools on blockchain.

throwaway82652 5y ago

That sounds good for any kind of HFT platform matching buyers and sellers. I don't see how that is an "insane advancement" or has anything to do with blockchains.

pazimzadeh 5y ago
Because the miner wouldn't be able to see the order book?..
- throwaway82652 5y ago
  Sure, if you care about HFT you probably want the same guarantee to apply to any market maker, not just ones who operate on blockchains. Unless I missed something here.

jkhdigital 5y ago

The real question here is not whether one can design a market that prevents bad behavior, but whether any of the major players will ever bother using it. If the “little guy” is always on the losing end of market shenanigans, then market makers will never have an incentive to move their liquidity to the “fair” market.

pcthrowaway 5y ago
The "little guy" is always at a disadvantage in capitalism (or small business, or mom & pop shop) I suspect there's a disconnect between people talking about democratization of access, and people pointing out crypto doesn't actually make things fair. Crypto doesn't make things fair for the little guy. It does add additional transparency to financial markets though, as well as things like open, verifiable, non-custodial, programmable financial contracts (as long as all the inputs can be verified reliably on-chain) This gives people equal access (with some limitations on what that means)
- throwaway82652 5y ago
  >It does add additional transparency to financial markets though No, not really. This comment is more crypto myth-building. There's nothing technical about blockchains that adds transparency. Any company that wants to publish all its financial statements publicly can technically already do so and could always do so. They don't for many reasons, the most important ones being that customers overwhelmingly want financial privacy, and financial companies are required by law to provide a certain level of privacy for customers. >open, verifiable, non-custodial, programmable financial contracts No, smart contracts are technically not "contracts" in the legal sense and are also not "non-custodial" because they require middlemen to run the blockchain. There is also nothing more open or verifiable about smart contracts compared to any other program. They're just programs. I absolutely hate that they used the name "smart contract" for this because it's so misleading. >as long as all the inputs can be verified reliably on-chain This will never happen because the only reason they're useful is because they take inputs from off the chain. The marketing is that users will be able to actually use these things to perform services. Of course that is self-contradictory because of the previous reason. >This gives people equal access No it doesn't, because only a small fraction of people are going to become smart contract programmers or are going to become skilled in auditing smart contracts. You might as well say all finance gives people equal access because anyone can become a CPA.
  - mw888 5y ago
    1. Saying that transparency isn’t desired does not refuse his point. Not only that but the off topic declaration where you imply privacy is impossible on blockchain is incorrect. 2. Miners and block verifiers are not middle men. They have negligible control where as a middle man has full control. 3. The verifiably of smart contracts is not exceptional for its own sake, but for the fact that it prevents cheating in a system where cheating is heavily incentivized. 4. Auditing smart contracts will generally be much easier than auditing EVM bytecode. Ethereum isn’t the only game in town and the most sophisticated layer 1 smart contract languages converge toward functional, locked down languages which lend themselves to automated and manual auditing. The same way open source increases user security even though 99% percent of users won’t build or read its code. You are so off base on all of your point I seriously doubt you don’t have an emotional stake in your position. Perhaps the classic “I’m a smart tech person yet I missed out, so really it’s always been bad and I’ll be proven right someday,” syndrome. You know other people that missed out simply developed some grace, and others still that identified problems went to work on them rather than pretending they were unsolvable. The dogmatic crypto skeptic is as bad as the crypto shill.

polygamous_bat 5y ago

So, the blockchain bros have reinvented... dark pools, which has been around since 1979? Because that's what you just described.

CryptoPunk 5y ago
Dark pools rely on the operator being trustworthy. Distributed encryption relies only on cryptography and the validator set being too large, and costly to join, to allow cooption, and both assumptions are highly trustworthy.
- spopejoy 5y ago
  Even if this is true, it is still just a dark pool, which is trivial to game. One ping is all you need. I think the race to put order books on blockchain is misguided. Constant-product DEXes can offer way less gameable best-execution by simply trading more cautiously for the swapper. Problem is, on Ethereum, gas makes it too expensive _not to trade_ once you get to the blockchain. MEV is a problem that can be managed effectively if the blockchain is scalable (thus avoiding gas problems).
  - CryptoPunk 5y ago
    >>Even if this is true, it is still just a dark pool, which is trivial to game. One ping is all you need. If that's true, then you're right. Assuming an effective decentralized dark pool, that is not vulnerable to side-channel attacks, is possible, it is preferrable to the centralized variety that traditional finance uses. >>Constant-product DEXes What is a constant-product DEX?
    - spopejoy 5y ago
      > it is preferrable to the centralized variety that traditional finance uses Citation needed :) . Seriously, crypto needs to do better than just assert that ownerless decentralization is instantly better. Traditional dark pools work just fine once you accept that with the right model, a single fill can tell you loads about the order book. > What is a constant-product DEX? That's the model used by Uniswap and almost every other major swap-based DEX. MEV as described in the TFA is preying largely on these DEXes and people conclude that it's the fault of the constant product model, or of being transparent. It's not: it's the fault of gas making it impossibly expensive to use the most basic tool in execution, splitting your order into smaller trades and applying logic to when you choose to trade. I'm actually kind of a constant-product maximalist because it shows you CAN have a public, transparent market, which is something genuinely new to finance. IMO the last thing the world needs are old-fashioned order books and dark pools on blockchain.