[API3] Update Price Feeds on USDC (Native) Comet Base to Recapture OEV

Proposals
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Summary

With this proposal, we’re suggesting that the price feeds on the USDC (Native) Comet on Base are switched to API3 in order to recapture OEV currently being lost needlessly by Compound. The recaptured proceeds will be utilised to purchase COMP on the open market and to top up the CometRewards on Base, unburdening the DAO from passing proposals like this in the future while utilising sustainable new funds for the process.

We’d appreciate the feedback of everyone in this proposal. After allowing for ample discussion time as well as time for running all simulations and tests in accordance with the comet scenario suit, we’ll be initiating an on-chain proposal to switch the respective price feeds on Base over to API3. PRs, simulations & tests as well as any respectively deployed contracts will be posted on this thread.

Description of the Proposal

Compound is losing significant sums to Oracle Extractable Value every time there are liquidations on the protocol. In the past, API3 has made a forum post suggesting how this value can be recaptured potentially bringing in millions in additional revenue to Compound on a yearly basis. After allowing for ample time for discussions to take place around the matter, we’d like to propose moving forward with the solution on a single comet to prove viability.

For everyone interested in knowing what OEV is and how our solution suggests to recapture it, there is an article available by Delphi Digitial here: API3: The State of OEV - Delphi Digital

To begin with, we’d like to suggest changing the price feeds to API3 on the USDC (Native) Comet on Base. The comet has been selected due to the fact that it is a small enough market to contain risk, while being big enough to show significant value being returned.

According to @gauntlet weekly reporting on this specific comet since April 2024 (here and here), the comet has been running on a deficit of nearly 155k. This calculation includes reserve accumulation and the COMP reward issuance on the comet (as seen in the screenshot below for the week of 2024-08-05 through 2024-08-11).

At the same time this comet has paid out nearly 330k in liquidation incentives. API3’s solution has the potential to recapture all of this value for Compound. Even being able to recapture half of the incentives currently bleeding away, would result in the comet running a profit instead of bleeding away money.

The price feeds needed for this change are for USDC as well as the respective collateral assets in the comet - cbETH, wETH and wstETH. All of these prices will be made available through Chainlink interfaces that Compound is used to while utilising the MultiplicativePriceFeed.sol contract for the LSTs that combine exchange rates of the respective LST with an ETH/USD price feed. This results in the following price feed changes:

  1. USDC/USD

  2. ETH/USD

  3. wstETH/USD (Multiplicative | wstETH/ETH Exchange Rate + ETH/USD)

  4. cbETH/USD (Multiplicative | cbETH/ETH Exchange Rate + ETH/USD)

The respective contracts will be deployed in the coming days and linked for review.

Since we’re treating this as a pilot project, the OEV that is being recaptured is going to be redirected to an API3 operated multi-sig on Base. The funds are then going to be utilised to purchase COMP on the open market and sent to the CometRewards contract on Base. If the solution is adopted across more markets in the future, the recipient of OEV proceeds can be changed to a Compound controlled address. If Compound is happy with the suggested COMP buy & CometRewards top-up method, API3 would be willing to continue this operation in the future for this and potentially other comets.

We additionally want to mention that @Gauntlet has been talking about the issues around timeliness in liquidations throughout the recent market turndown in the past community call as well as on this forum post. Adopting API3s OEV solution also comes with the added benefit of additional searchers that are going to be actively performing liquidations on API3 supported comets. We’re working with a few specialised entities that have onboarded to our solution and are actively performing liquidations across all API3 supported protocols. This proposal doesn’t only introduce another oracle provider that happens to return significant some of money back to Compound, but it also provides Compound with more searchers on API3 supported comets to tackle an issue raised by @Gauntlet.

Resources:

API3 Website

OEV Network Documentation

Delphi Digital - “API3: The State of OEV”

Decentralized.co - “On OEV - Putting MEV back to where it belongs”

Dune - Liquidation Data for Compound USDC (Native) Comet Base

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In the coming days we will post all relevant contracts related to the price feeds that were deployed as well as the tests and simulations completed with the comet scenario suite.

The @Gauntlet update of the week for the USDC Comet on Base shows another net loss of $5.9K, bringing the total loss of the comet to over $161K.

The comet could already be operating at a profit with a mere 50% recapture rate on liquidation incentives paid ($327K total), but is instead actively losing Compound money.

We’d love to receive feedback/comments from the Compound community before putting the proposal up for an on-chain vote.

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Have any Compound delegates with more than 10K COMP signaled support for this proposal? That would be necessary before there can be any serious consideration for this proposal to be submitted on-chain.

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We hold sufficient voting power (and have support) to move the proposal on-chain and would ask the community again for feedback or comments on the above.

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Do you mind identifying the delegate account you have on Tally and register it with a public profile so everyone can be made aware and verify your delegations?

I’m not aware of any other delegates or community members that have signaled support for this proposal. If there are, I would welcome them to share their thoughts here.

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At present, Compound has only ever used Chainlink as an oracle provider. In the past, OpenZeppelin has done evaluations to consider other providers like Redstone to ensure their compatibility with the protocol. We would urge that an evaluation be done for API3 as well but only once it has received significant support from the community to move forward. I would also ask @Gauntlet to assess the claims made by API3 regarding profitability and the impact on timeliness of liquidations, following up on their earlier concerns shared on OEV.

While OpenZeppelin remains neutral on the selection of vendors to the DAO, I do have concerns with deploying API3 as a provider on a live Comet market without further due diligence. API3’s current adoption is fairly small compared to other oracle providers and does not have any significant usage on chains where Compound V3 is active. Simply put, API3 does not yet have a track record of supporting a major DeFi protocol such as Compound and the community should carefully weigh the risks of being the first major adopter, especially given how much the protocol’s health relies on up-to-date price feeds and liquidations.

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We’ve made a post back in early June, asking the community to review the potential while being in close contact with the Alpha Growth team. We’ve also given a presentation about the solution during the Compound Developer Community Call on June 26th, while also asking for review from all relevant parties again here. Gauntlet has been answered, after which everything went dead silent again for nearly three weeks.

Overall, the proposals doesn’t seem to be taken seriously because delegates don’t think sufficient voting power can be acquired to move the matter forward, despite proposers taking every measure possible to receive recognition or feedback, which is very frustrating.

We’re more than happy for an official review, in fact have been asking for it for months.

Despite the fact that Chainlink is being illustrated as the ultimate solution, this is far from the truth.
There have been misreports of Chainlink like e.g. the one on Silo.Finance, where a misreport of the wstETH/ETH price feed caused nearly 2 Million in false liquidations. The only reason there wasn’t a huge uproar on the matter is because Chainlink got lucky, as the Silo teams’ own liquidator bots caught the positions and simply returned the money.

Similarly, there are Chainlink products like the Sequencer Uptime feeds that are simply not working when it matters most. The Chainlink team doesn’t even bother to go into why that is the case despite being asked by the respective projects to do so.

Our data feeds have been operating since early 2023 and secured $1.2 Billion at the peak a couple of months ago. During all of this time, there were no incidents. Believe me, you would have heard it everywhere and it would have been posted under the posts we’ve made in the Compound Forum relentlessly.

While we’re not securing several billions yet, it was also not a core metric for us to grow beyond a $1 billion. Our goal for 2024 in total was to reach $1 Billion to gain “legitimacy” in order to be able to give our OEV product better standing.

Our focus was to release our OEV product that allows us to differentiate ourselves from other oracle projects to begin with. Without the OEV product and the prospect of recapturing several million $ in additional revenue per year, dApps simply have no incentive to switch from their known oracle provider. The push with this proposal comes at a time, where we are ready to recapture significant value as all requirements have been completed in recent weeks, which is also why we’re being so aggressive about it. This doesn’t mean that we’re not happy to be thoroughly looked at (again like we’ve been asking for since the beginning).

We first got to Compound because we were introduced to Alpha Growth for ways to earn additional revenue for Compound. In fact, recent discussions around future revenue generation even go precisely into what we are proposing here. Our solution has the potential to recapture millions of dollars per year for Compound and we’ve chosen a smaller market to illustrate this potential.

The lending and borrowing space is pretty cut-throat. Compound spends multi-millions a year on operations financing entities like @Gauntlet or OpenZepplin(@cylon). Despite this massive expenditure and liquidity mining, Compound is losing.

On Ethereum Mainnet, Compound is currently the third largest lending protocol, soon to shoved to the fourth spot by a rapidly growing Morpho.

On Arbitrum, Compound stands at 1/5 the size of AAVE despite throwing the biggest incentives there apart from mainnet. According to this dashboard, the Arbitrum Comets are being incentivized with 130 COMP daily. That’s a loss of $5.5K daily for COMP to be 1/5 the size of AAVE, while AAVE isn’t even handing out any rewards.

On Base, Compound is ranked #5 largest lending protocol, potentially being shoved to #6 or even #7 with rapidly growing Radiant and Fluid. This is despite distributing 26 COMP (or $1.1K) daily rewards.

On Optimism, Compound stands at 1/10 the size of AAVE, despite distributing 27 COMP (or $1.1K) daily rewards.

On Polygon, Compound stands 1/12 of the size of AAVE, despite distributing 23 COMP (or $1K) daily rewards.

When Compoundv3 was deployed on Scroll in early April, the total chain TVL was standing at roughly $55M. Since then it grew to over $650 Million. Compound has a total of $1.5 Million in size on that chain. In April, AAVEs’ Scroll Deployment had $5 Million in TVL and is currently sitting at nearly $140 Million, which is nearly 100 times larger than Compound.

One could argue that size doesn’t matter if the protocol would actually make money with the deployments, but if you take a look at @Gauntlet’s weekly reporting on the matter, nearly all comets are effectively losing money. What’s the endgame here?

The direction for Compound is pretty obvious, if things continue in the same path they have been until now. You have significant cost centers in service providers ranging from security firms, to risk assessment and growth initiatives. On top of all of this significant sums are being spent on liquidity mining incentives.

Does Compound make enough money to offset this in any meaningful way?
If you can trust the data from Defillama or TokenTerminal, it doesn’t seem like it at roughly $3 Million a year. Our initial conversations with Alpha Growth also heavily indicated that Compound is looking for ways to make money. The recent push towards a stCOMP product also heavily indicates that Compound is looking for ways to maximize value for stCOMP holders.

This isn’t a proposal that asks Compound for money (despite the fact that the operation of the product costs us money). In fact, I’d even argue that this is probably one of the most unique proposal that has ever been made, that promises making money for Compound while asking for nothing monetary in return.

Happy to discuss the matter further.
Here is a dashboard that illustrates the potential for recapture for all Compv3 deployments:
https://dune.com/ugurmersin/compoundv3-liquidation-data

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One point I forgot to mention and need to reiterate:
Compound is also facing an issue with timeliness in liquidations, which this proposal would also tackle at the same time by allowing all searchers already integrated with our OEV solution to actively perform liquidations on Compound.

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Since I have received several DMs about this in the past 24 hours, I feel like I have to address a common misconception about what this proposal is suggesting.

This proposal is in no way shape or form increasing the liquidation penalties to Compound users or acting in any other way predatory towards compound users.

When liquidations are possible on Compound due to price updates, the Compound protocol incentivises anyone that wants to, to liquidate positions by offering a discount on the collateral of the user that gets liquidated.

In simple terms this means that if a $100K user position is to be liquidated and there is a 10% liquidation penalty, the compound protocol is enabling someone to acquire $100K worth of collateral for effectively $90K.

This means that there is potentially $10K in profits to be made for anyone that performs this liquidation.

This in an insane amount that is being paid, because liquidators on mainnet regularly give up 99.9% of this incentive to block builders as bribes during blockspace auctions.

So, what are we suggesting here?

This proposal aims to effectively run auctions on the $10K that are available and that Compound is missing out on and to return as much of that as possible back to the protocol. It improves the efficiency of liquidations and returns money back to the protocol instead of needlessly leaking it away to third parties.

On this dashboard I’ve illustrated that Compound has already paid out nearly $13M in liquidation incentives on all V3 markets (live since roughly two years).
Considering that auctions have the potential to recapture up to 99.9% of this value, Compound quite easily has the potential to triple protocol revenue.

Current calculations (as well as other dashboards) illustrate the revenue of Compound at roughly $3 Million a year. Considering that $13 Million were paid out in the past two years that theoretically can be recaptured going forward, this number could be more than tripled to $9.5 Million at optimal recapture rates. Even at recapture rates of 50%, the protocol revenue could still be doubled to $6.25 Million

What we‘re proposing here is an immediate fee switch for Compound that takes advantage of the competitive nature of third-parties for liquidation incentives by giving them a place for this competition to take place, and returning all of the resulting money back to Compound.

At this point, we‘re truly unsure how else we can proceed to prove viability of something that has the potential to double or even triple protocol revenue. In fact, we‘re somewhat perplexed that there seems to be little to no desire to actually bring in several millions a year more to the protocol.

@L_alive is one of our engineers behind our OEV product and will be available on Wednesdays community call to address any comments, questions or concerns on the matter. We would love and appreciate a healthy debate on the matter.

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Hi @ugurmersin,

Thanks for the proposal

After reading this proposal and your prior proposal in which Gauntlet gave feedback we had a couple of comments. We are relatively supportive of OEV initiatives provided they impose no major timing risks for liquidations that leave the protocol with bad debt.

Firstly, while the USDC (Native) Comet on Base is a relatively small market ($15M of collateral) these depositors entered the market based on the market config at that time. So introducing changes to the liquidation system and Oracle setup is unfair to the user and may force them to leave. If there were to be OEV experimentation, we think it makes more sense to have a separate Comet instance while OEV solutions are still in their infancy. We understand that this could be frustrating as it would require bootstrapping a new market but providing depositors with optionality in the early stages is important.

Secondly, we share most of the same concerns that Gauntlet highlighted previously about your OEV Network which introduces friction to liquidations & reduces competition due to the collateral requirements and onboarding of Searchers to the OEV Network. We would want the solution to be more open and have fewer requirements on the Searcher side. Did you have any data on the number of Searchers on the network and how many liquidations have been processed so far?

For auction timings, what is the maximum time an auction round can last for i.e., when does the Auctioneer stop the auction and select the winner?

“If a bid has just won an auction, the auctioneer waits for 60 seconds before starting the next auction round for that dAPI proxy.”

Does the above imply that if there has been a successful round of bids to liquidate a position, let’s say for example on the USDC Comet, then no more liquidations can technically occur on this market until after 60 seconds have passed and a new auction round starts?

“If no bids are satisfied, the auctioneer waits for the next block or dAPI value change.”

While this will likely be a rare occurrence, what is the fallback mechanism for when no bids are satisfied? Are liquidations still gated by the OEV Network and therefore, do not occur, or do they get opened to anyone on the target chain?

“The searcher fetches the awarded bid transaction from the OEV Network. This transaction contains the encoded calldata. The searcher has 60 second window of exclusivity period to trigger the oracle update.”

We assume this is related to the 60-second window before the next auction starts as described above, but doesn’t this seem like a rather large window to enforce liquidations?

Thanks!

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Hey @WintermuteGovernance!
We really love and appreciate the feedback. I’ll address most of the points you’ve made here and also want to stress that one of our engineers behind the OEV Network is going to be available in todays community call to address other or follow-up questions that might arise.

This is something that i thought long and hard about myself and while i do understand your perspective on the matter, here is mine on why we did not go with a new comet.

Comets are not static and subject to changes constantly through governance. Depositors already need to monitor governance and potential changes to the comets that they are depositing into as they can be reconfigured in various different ways. Adding new collaterals into comets increases the risks for me as a depositor. I’ll have to check if i agree with the risk assessment that governance comes up with and if i agree with the parameters that are about to be set including the oracle selection. On the basis of this, decisions have to be constantly made if this new/changed risk is worth keeping the collateral in the respective comet.

This decision is no different than changing risk through any other governance discussions and changes nothing about how depositors behave to ever-changing parameters on comets.

The auctioneer has thus far awarded roughly 2500 bids, but i want to stress that most of these were done under testing circumstances and in training wheels after. During testing several hundred small positions were created on live partner protocols close to liquidation points in order to test the entire mechanism. Searchers were also told to keep bidding behaviour relatively conservative during this process to allow us to investigate what would happen if there is relatively little or no competition at all. We can also report that roughly 50 unique accounts have interacted on OEV Network, which obviously doesn’t mean that there are 50 unique searchers active on OEV Network.

We’re working together with several searcher teams though and can confirm their activity, however due to the nature of the OEV landscape and how other solutions out there offer exclusivity benefits to searchers for not partaking in other solutions we cannot disclose names. For our as well as their sake we’re keeping them pseudonymous.

Before i go into all of the technical questions you had i want to stress that i think there is a slight misunderstanding what is being won during the auctions. I’m aware that other OEV solutions are effectively gate keeping liquidations and auctioning off the rights to perform liquidations exclusively through a relay only, but that is not at all what is happening here.

You can think of our solutions more as Arbitrum’s proposed TimeBoost, but for oracle data.

A decentralised oracle network still maintains price information on the respective chain and will continue to do so even if the OEV mechanism somehow malfunctions. This price information however is delayed minimally and the OEV Network sells real-time data. It effectively acts as an express lane for oracle data for anyone that is willing to pay for it, similarly how Arbitrum is proposing an express lane with their TimeBoost for anyone willing to pay for it.

It is also important to state that what you’re winning is the right to update the oracle to a specific price NOT the right to perform a liquidation exclusively. You could win the right to perform an oracle update and if you do not bundle your oracle transaction with the liquidation in an atomic transaction, never get the liquidation. This would be the case if you e.g. perform the oracle transaction first (here you executed the right you won) after which anyone can come in and utilise the new price you just submitted. Similarly the oracle nodes still maintain the respective price feed that you won the rights on, so if the right is not taken advantage of within a certain timeframe, regular oracle updates will be performed after which anyone can utilise the price to perform a liquidation.

Hope this clears that matter up, and now to your questions.

Auctioneer periodically receives price data from the oracle nodes and checks that against respective bids that were made and if any of their conditions are met. The award is basically instantaneous as soon as a condition is met.

Imagine the following scenario:

  1. Current price that auctioneer received for ETH is $3001.
  2. Searcher A bids 1ETH for ETH lower than $3000.7
  3. Searcher B bids 3 ETH for ETH lower than $3000.5
  4. Searcher C bids 2 ETH for ETH lower than $3000.1
  5. Auctioneer receives new price information for ETH: $3000
  6. Searcher B is awarded the oracle update with the price point $3000 immediately and can utilise the price without delay

In this example the new price that auctioneer received met the conditions for all three searchers and as such the new price point was awarded to the highest bidder. The searcher can now exclusively update the price point to $3000 and combine that with e.g. a liquidation call.
If the searcher does nothing the following will happen:

  1. The searcher gets slashed on OEV Network as prove of a executed oracle update cannot be made
  2. The oracle network that is delayed might update the price point on-chain if deviation or heartbeat conditions are met
  3. Auctioneer will begin awarding bids again after 60 seconds have passed. This will be immediate if any conditions are met with the current price point after the 60 seconds have passed.

No not at all. All you do is win the right to update the price. In no way shape or form does this restrict the amount of liquidations that can be performed.
The “express lane” will be closed for 60 seconds for new express oracle updates, but the regular oracle nodes will continue their delayed operation to update prices if heartbeat or deviation conditions are met. The express lane will immediately award new bids if conditions are met after the auction delay period.

I think this is being mistaken for the other OEV solution you have in mind again. Our OEV solution does not gatekeep liquidations, it gives you priority access to oracle data, with a regular oracle network at its back that acts as a fallback.

If there is no one bidding, or the OEV Network is somehow down, the regular oracle nodes that are maintaining price information on the respective chain will simply update and liquidations can be performed as they always have been. The only thing that happens is that the “express lane” is closed, but in no way does this mean the “highway” is closed :wink:

Hope that clears all of this up.
It’s like Arbitrum’s TimeBoost, natively integrated to API3 Oracles, offering “oracle express lanes” on all networks we’re deployed on.

Lastly i wanted to mention that we’ve already received quite a lot of feedback from searchers that will be incorporated in the next iteration/upgrades to OEV Network. We value @WintermuteGovernance and our previous relationship with you and would love to incorporate any feedback or wishes you would have into these iterations. Please feel free to reach out over DMs or on Telegram @ugurmersin_61 if you want to connect on the manner.

To repeat, @L_alive will be available in today’s community call for any follow-up questions!

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Thanks @ugurmersin, this is great and makes things a lot clearer.

This is a fair point and we agree to some extent, but we also have risk service providers ensuring this is done safely. Ultimately, the DAO will have to make a decision about the tradeoff we highlighted. Personally, we still like to err on the side of caution given the infancy of OEV solutions, but we’d love to hear what other delegates think

Thanks again for the detailed reply!

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Really appreciate the feedback @WintermuteGovernance! I agree on being cautious. Our solution has the advantage that it works on every chain, which is why we can easily test this out on smaller comets that are deployed on L2s, without requiring experimentation on the large Ethereum Mainnet Comets. That is one of the reasons we’ve specifically decided to go with the proposed comet.

In the coming weeks, I’ll be spending some more time on education around OEV for the Compound community. There are already some activities planned with the AlphaGrowth team, after which we can assess the appetite of the Compound Community through a snapshot vote for running a pilot program.

That would indicate sufficient support and justify a deep dive into our solution by OpenZepplin (as discussed with @cylon).

I want to stress that offering express lanes for people willing to pay for them and redirecting that money back to Compound offers a huge opportunity. There is a reason this is being heavily discussed and considered by Layer-2 solutions like Arbitrum for their transaction ordering.

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Our design is nearly identical to what is being proposed by Arbitrum for their transition ordering, which IMO gives even more credibility to our proposed solution.

  1. A slight delay for regular transactions
  2. an express lane for those willing to pay
  3. access is auctioned off through on-chain auctions
  4. collateral requirements for auction participants

I also want to mention that people like monetsupply question if the proposed delay by OEV solutions (that is being brought up by e.g. @Gauntlet) will even make a difference for lending protocols.

An additional thing to highlight is that these delays that are being spoken about in several of these solutions are minimal and in our specific case only come into affect if the OEV Network malfunctions in any way. Compound is facing bigger issues as evident by the recent discussions around liquidation performance and how the protocol is exposed to risk for several hours due to unhealthy liquidator activity.

In addition to @Gauntlet pointing more liquidators towards Compound comets, we’ll also be able to attract more searcher activity towards the comets to tackle the liquidator activity issue.

Looking forward to further discussions around OEV! :slight_smile:

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Just wanted to keep the community updated on this matter. There were activities planned in the past week to further discuss OEV and its benefits in a more public setting, that had to be cancelled last minute due to some participants opting out in the last seconds.

That being said, we’ll be posting relevant contracts that have been deployed here soon, follwed by the test results with the comet scenario suite.

The respective contracts that are going to be used to replace the Chainlink Interface that Compound currently utilizes have already been audited by Quantstamp and can be found here.

Another part i wanted to mention is that we’ve already communicated to searchers that we’re working together with to begin performing liquidations on this specific comet on base, despite not being OEV integrated yet.

In the past week they’ve already begun performing liquidations. We’re happy to communicate to them to also monitor other comets if the Compound community wants us to, but also want to stress that due to the nature of L2 transaction ordering currently (FCFS), catching liquidations isn’t guaranteed whereas incurring costs (in the form of rpc or hosting) is.

A funny observation that we’ve made while looking at the liquidations performed is that sometimes liquidations and oracle updates occur in the same block, which is very unusual. Since there is no mempool, you cannot know when the oracle update will occur. Leaving aside the possibility that the sequencer or the oracle is selling order flow (which could be seen as malicious) we looked further into this.

What we found is that some searchers are spamming liquidations in anticipation of a future oracle update by potentially monitoring the prices off-chain (through an API). Most of these transactions revert, but because this is being done over several blocks (we’ve observed 3-10 on Base or OP) they’ll eventually get it. This behaviour is especially common on Optimism or Base comets because of the 2 second block times, which means that searchers are effectively spamming over the course of 6 - 20 seconds, in which they will receive the liquidation in case the oracle update is performed in any of those blocks. This doesn’t only happen on Compound on Base, but also on AAVE & Moonwell.

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Why am i mentioning this? Well, searchers are in effect already competing and giving up significant value that is being offered to them. Because there is a lack of an auction platform for that competition to take place (e.g. blockspace auctions or oracle auctions), they’re just burning gas in anticipation of potentially hitting the same block as the oracle update and being the first. The benefactor of this behaviour here is mainly the sequencer of the respective chain, as significant amounts of money (especially during high volatility) are burned by these searchers undergoing this activity.
In the above example, the searcher burned through 0.55 ETH in gas in order to get the liquidation which netted $9000 in revenue.

The worst part about this however is, that searchers aren’t even guaranteed to get the liquidation through this spam, as other searchers performing the same activity will cause this strategy to be a method of pure gambling. This is pretty risky and I’d even go as far as saying that some searchers showing or having showed this behaviour in the past, could be the very cause for the limited searcher activity that gauntlet also observed on Compound.

Why should you run infrastructure and monitor positions, if there are people basically burning through thousands of $ for the potential chance for the liquidation. In the above example the searcher could have just as well spend 0.55 ETH and not gotten anything because somebody else happened to have submitted the transaction to the sequencer first, resulting in being ordererd higher within the same block as the oracle update.

With OEV Network, there could be a place where these searchers could compete that would also “guarantee” the winner the liquidation option. Instead of spamming and hoping for the best, searchers could simply bid however much they’re willing to give up and if they win, take home the profit guaranteed without partaking in these spam wars. Having a venue for competiton would also allow more people to partake as profit is quantifiable instead of a pure game of luck that is won by the person anticipating and transacting the fastest on the block that’ll include the oracle transaction.

Looking forward to keeping the Compound community updated on this.
As usual, if there are any questions, please feel free to ask! We’re more than happy to answer everything!

Best,
Ugur