The Problem: In DeFi, gas wars eat profits and harm the ecosystem.
When a borrower experiences a liquidation event (on platforms like Compound, Aave, etc.) collateral is put up for sale or auctioned. Traders and bots compete to trade during these events and extract value.
In order to get their trade prioritized, traders increase the gas they pay, hoping that miners will pick up their transactions first. This is is the start of a gas war! Traders pay fees that eat into profit, and miners get paid booku.
KeeperDAO has an interesting solution impacting three actor groups:
💳 Borrowers who are about to get liquidated…
+ Wrap their debt positions via KeeperDAO
+ Commit to the liquidation event happening early
+ Receive $ROOK tokens = to the profit from the liquidation
💰 Individuals/bots trying to extract value via trades…
+ Opt-in to KeeperDAO membership
+ Are algorithmically each given opportunities to trade during liquidation events (reducing competition/gas wars amongst members)
+ Receive priority trading status during liquidation events (because liquidation events happen early)
⛏ Miners processing transactions…
+ Have less of an incentive to reorder transactions based on gas warring, promoting a healthy ecosystem
This project is cool because it helps traders voluntarily unionize; splitting up trade opportunities amongst members. It also helps borrowers — subsidizing losses via sharing profit. This solution is the definition of mutualism; a symbiosis beneficial to all organisms involved.
Looking forward to following KeeperDAO’s progress,