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!