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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,

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 4y 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 4y 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 4y 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.
    - CryptoPunk 4y ago
      On the basis that the cryptography remaining unbroken and the protocol-genetated incentives creating a validator set too large to coopt are more reliable trust assumptions than the trusted third party controlling a traditional dark pool being competent and trustworthy. >>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. Yes that makes sense.

spopejoy 4y 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 4y 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 4y 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.
  - CryptoPunk 4y ago
    On the basis that the cryptography remaining unbroken and the protocol-genetated incentives creating a validator set too large to coopt are more reliable trust assumptions than the trusted third party controlling a traditional dark pool being competent and trustworthy. >>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. Yes that makes sense.