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Protocols
Protocols are automated systems, which can be viewed as modules within larger ecosystems.
The success and smooth functioning of DeFi protocols is crucial to the adoption and development of blockchain technology. However, the Ethereum Dark Forest has adverse effects on the survival of DeFi protocols.
The aggressive strategies of miners and third-party bots (Keepers) to capture on-chain profits (MEV) lead to PGAs and grim triggering. As a result, DeFi protocols and their users experience increased transaction costs, failed transactions, price slippage, and traffic congestion. These disadvantages reduce user confidence and interest in DeFi protocols. At a deeper level, the tactics behind the strategies also show a greater threat to the fundamental assumptions of blockchain itself. The ability of miners to essentially censor a user by reordering transactions, or by reorganizing blocks, poses a threat to the integrity and core values of blockchain technology.
The dark forest is structured in a way today where Keepers do not benefit protocols - but this is not a hard fact and can be redesigned. Keepers can assist DeFi protocols in offloading risk through activities like arbitrage and liquidation. It is necessary to properly incentivize them and help unlock their full potential. DeFi protocols should be able to bid for Keepers' efforts through a decentralized marketplace.
KeeperDAO fills this void by formalising and incentivising the work of Keepers.
Last modified 1mo ago
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