50 sats \ 3 replies \ @ln_cortado 7 Oct 2022 \ parent \ on: Live graph of Ethereum regulatory capture bitcoin
That's my understanding. The relays themselves make money through MEV which simply said is the process of ordering your own transactions between organic ones in such a way that you arbitrage/profit from it.
In the same way that Citadel pays for Robinhood's order flow in order to use high-frequency trading to profit off the known retail trades, these validators have arbitrageurs include transactions which exploit the public retail blockchain transactions (e.g a trade on Uniswap) in order to profit from that. One of the simplest ones is a dead-sandwich attack.
It's scandalous.
MEV which simply said is the process of ordering your own transactions between organic ones in such a way that you arbitrage/profit from it.
Oh, wow, I heard first of MEV a long time ago but never looked into what it actually is.
This sounds exactly like "retail vs hedge funds" in tradfi (as you described with Robinhood and Citadel).
Yes, sounds very unethical, especially if it's done on a blockchain claiming to be the decentralized. They just enable the same stuff as before.
I have to look deeper into this, thanks for your explanation! You got me interested
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Now that I think more about it: Even the name "Robinhood" is similar and hilarious. It suggest to give power back to the people or to "rebel against tyranny" [1], but it's doing the exact opposite; exploiting retail even more.
[1]
In popular culture, the term "Robin Hood" is often used to describe a heroic outlaw or rebel against tyranny. -- https://en.m.wikipedia.org/wiki/Robin_Hood
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The rabbit hole goes deep :)
I was much into DeFi when I first heard about it - the theoretical idea is good but this current iteration is nothing close to it. It's re-designing centralized finance with a bit less obscurity but a lot more fake promises.
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