DeFi
Pyth Network Introduces Express Relay, Aiming to Reduce MEV in DeFi
Pyth Network launched Express Relay on mainnet, introducing a decentralized solution to the problem of miner extractable value (MEV) in DeFi transactions.
The Pyth Network provides real-time market data for blockchain applications, focusing on securely and inexpensively bringing latency-sensitive financial data on-chain.
This new product connects DeFi protocols directly to a network of established researchers via protocol-controlled auctions, eliminating the role of miners and improving market efficiency. Researchers integrated with Express Relay include Flow Traders, Wintermute, Auros, Flowdesk, Caladan, Tokka Labs, and Swaap Finance.
MEV Issues for DeFi
MEV traditionally allows miners or validators to capture most of the value of DeFi transactions through block space tips. However, Motor vehicles poses several significant challenges to blockchain ecosystems, especially DeFi.
This can lead to increased transaction costs and network congestion as miners and validators compete to extract valuewhich can potentially exclude regular users. MEV practices such as front-running and sandwich attacks can also result in unfair advantages for sophisticated actors, eroding trust in the system and potentially discouraging wider adoption. Additionally, the concentration of MEV mining capacity among a few powerful entities threatens the decentralization ethos of blockchain networks, as it can lead to the centralization of power and influence.
Finally, in extreme cases, the continuation of MEV could encourage malicious behavior such as blockchain reorganizations, jeopardizing the integrity and security of the entire network. These issues collectively underscore why MEV is considered an important problem that requires careful consideration and innovative solutions to maintain the fairness, efficiency, and decentralization of blockchain systems.
How Express Relay Solves MEV Problems
Express Relay changes this dynamic by awarding transaction rights to the finder with the most competitive bid and removing miners from the process. This setup encourages aggressive competition between finders over transaction value and allows DeFi protocols to increase liquidation reward incentives. As a result, protocols can save money, which can be redirected to more productive initiatives or passed on to users.
Protocols such as Synthetix, Zerolend, Ionic, Synonym, Keom, Jax Finance, Vela Exchange, and Fulcrom Finance, representing $1 billion in total value locked across 11 blockchains, have integrated or are integrating with Express Relay to mitigate the impact of MEV. This integration significantly reduces the costs associated with critical operations such as setting liquidation rewards.
Express Relay also facilitates the deployment of new protocols by providing access to an established network of researchers, reducing the need for protocols to build their own networks of liquidators and researchers. It aggregates valuable DeFi transaction opportunities across multiple protocols and blockchains for researchers, simplifying access and reducing trading and integration costs.
The launch of Express Relay was announced at the inaugural Pyth Agora 2024 Summit at the Ethereum Community Conference on July 11. The primitive is owned and governed by the Pyth DAO. Key industry figures including Michael Lie of Flow Traders, Tim Wu of Wintermute, Matt Losquadro of Synthetix, and Ryker of ZeroLend have expressed their support and enthusiasm for the initiative.
Wu, Head of DeFi at Wintermute, commented:
“Express Relay is a natural evolution of Pyth’s core oracle production. It aims to reduce value extraction by intermediaries and improve the efficiency of liquidation execution, effectively tackling this form of MEV.”