2d ago
One of the reasons PMMs have taken off is specifically because of “abusing” the quoting systems used by aggregators like Open Ocean and Jumper.
Defi is slow so when you place a trade on chain most of the time you specify an acceptable “range” which you’d buy at. Platforms have discovered that consistently giving you the worst allowed price is highly profitable. Quotes are all off chain so there’s no way for outside parties to tell if the “slippage” is real or just the platform extracting value.
However, it is possible to compare how “good” a price was relative to other trades for the same asset in the same block, which should correlate closely to quote abuse.
3d ago
with all the drama around DEX aggregators, I've seen a LOT of people get this wrong
even relatively smart people (even my cofounder who I totally did not have to put on here, but I would like to embarrass him anyway for no reason here)
when you are comparing swaps across DEXes, you can NOT use the quote shown on the UI as a reliable signal
this is a mere estimation, and it varies depending on a shit ton of factors, including liquidity, staleness, RPCs, and even the API version
the ONLY way to compare is to actually do the swap and then see what price you got onchain
and the only way to compare across providers is to do this simultaneously for all of them using their APIs, which obviously no retail user will do
but again, the number shown on the UI (in this case Uniswap for illustration), is only an estimate and you can not use it to say that one team is better than the other
This is a very hard problem. Block time on eth is 12 seconds. If the price moves in 12 second a trade with no slippage tolerance (fixed quotes) will fail.
The “right” solution is simply measuring aggregate slippage and penalizing liquidity venues that abuse it. Some aggregators are moving towards this but it will take time and complexity always comes at a cost (the best liquidity providers are the least likely to use a new, complex system).
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