How DeFi project Archer DAO protects traders from the MEV problem 🚨 This article is 3 years old...
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How DeFi project Archer DAO protects traders from the MEV problem
It’s the first project to bring the concept of Trader Extractable Value to market.
2 min read
Updated: Feb. 20, 2022 at 2:37 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Archer DAO combats one of the most criticized problems plaguing the DeFi market today: That of opportunist bots and front-running programs that result in burgeoning GAS costs on networks like Ethereum.
The problem
Termed ‘Miner Extractable Value,’ the tactic is used by a proof-of-stake miner’s ability to place transactions into each unique block. This allows miners to extract profits at the expense of users, oft-resulting in an overall slower network and high GAS fees.
Archer DAO has a solution for that. The project has introduced the innovative ‘Trader Extractable Value’ concept to market, building further on Archer Swap’s existing benefits (those of protecting users from front-running bots, zero costs for failed transactions, and canceling trades at zero cost).
The Archer TEV process flow.
?We are the first to launch a true TEV platform.?
Our ethos: protect traders from unnecessary fees or exploitation and distribute any value created on the back of that trade back into the ecosystem.
LIVE NOW pic.twitter.com/986cUGvh8y
— Archer DAO (@Archer_DAO) June 9, 2021
At its core, the Archer TEV has a simple working: It allows traders to earn ARCH from their usual trading activity through Archer Swap, forming an income-generating feature, as opposed to a loss-prevention one.
How Archer TEV works
As per a blog post, this is made possible via optimizing the many arbitrage opportunities that traders create following their large on-chain trades. “When traders make big swaps, they open big arbitrage opportunities. Normally, arbitrage bots capture this value,” the team explains.
It adds, “With Archer Relay, the trades are private, so the Archer network captures that value instead and distributes it to traders.”
This is how Archer TEV generates revenue – by protecting and backrunning big trades like this: 529k UDSC –> 7.8m SWAGhttps://t.co/60DlZ8i10f pic.twitter.com/ti7w0Lj3Iu
— Archer DAO (@Archer_DAO) June 12, 2021
The team gives a further explainer regarding TEV’s workings:
- A trader submits a purchase for $10,000 worth of a token on Archer Swap (using the Uniswap liquidity pool).
- This causes a temporary imbalance in the Uniswap token pool. The token price on Uniswap relative to other markets is higher.
- Because Archer Swap was used, the transaction is sent to the Archer Relay.
- Archer’s back-running bots are privately alerted of the arbitrage opportunity and will execute if profitable.
- The value captured from this arbitrage transaction is sent to the Archer Treasury where it is later distributed to Archer Swap users.
To incentivize trading and participation, A six-week $ARCH and Archer Swap buyback and rewards campaign launched earlier in June and is currently in its second week. Traders, what are y’all waiting for?
Archer TEV is currently distributing $ARCH tokens to all traders who make a transaction on Archer Swap. Last week users averaged a 66% rebate on their trading fees!
Don't miss out — only 5 weeks left of rewards!
Stop making bot owners rich – POWER TO THE TRADERS! pic.twitter.com/xlRsM6Mece
— Archer DAO (@Archer_DAO) June 15, 2021
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Archer DAO is a series of Ethereum smart contracts governed by ARCH token holders.