⚡️ Intro

<aside> 💡 Skip is building cross-chain transaction execution products for the Cosmos ecosystem to amplify the benefits of MEV for the Cosmos community while reducing its harms.

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https://www.loom.com/share/ae41a0fa332141338bab439a0c6e10e1

<aside> 🎉 **Skip is currently live on various Cosmos chain mainnets (and testnets)

To get set up, see our Skip Documentation**

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We’re working closely with Cosmos ecosystem leaders to ensure our product maximally benefits the Cosmos community. Specifically, we’re designing our infrastructure to:

  1. Increase the block rewards Cosmos validators and stakers earn by introducing payment for prioritization, which will increase Cosmos’s network security, TVL, and competitiveness
  2. Protect the user experience for ordinary Cosmos users by preventing gas wars and censoring toxic forms of MEV, like sandwich attacks on public DEXes
  3. Defend validators from spamming and other DDoS vulnerabilities that have recently affected other chains

🏃‍♀️ MEV on Cosmos Today: Speed and Spam

Cosmos chains like Juno, Terra, Osmosis, and Cronos currently have a first-come-first-serve mempool. This means to win arbitrage opportunities, searchers try to locate their arbitrage bots as close to as many validators and full nodes as possible and spam them with transactions.

These strategies create numerous negative externalities for the chain:

  1. Execution Risk: In periods of high chain congestion, there’s no way to express that certain transactions are “more important” or more economically valuable for the trader or for the ecosystem. This happened extensively during the 5/9 Terra depeg.
  2. Wasted block space and gas: You can find a graveyard of multiple failed transactions behind large arbitrage opportunities (e.g. see Terra Classic block 5635240) from the rush to be first.
  3. Centralization of profits: Almost all arbitrage opportunities are won by a very few addresses, likely controlled by a couple HFT shops that can afford the massive low-latency infrastructure required to win the race. This amounts to a hidden tax on Cosmos users and validators who create these arb opportunities but can’t capture them.
  4. Consolidation of participants: MEV searchers and validators are incentivized to vertically integrate to get their bots and nodes on the same servers for faster mempool access and transaction broadcasting. (e.g. We’ve seen partnership progress between MEV-searchers and validators for preferential access), which undermines longterm decentralization.
  5. Chain halting risk: Large waves of spam can knock out full nodes or validators (when they expose ports), as has happened recently on other layer 1’s (e.g. Solana)

Each of these externalities scales with transaction volume as Cosmos grows (as the experiences of other chains demonstrate).

(It’s important to note that today, validators are also incentivized to censor, reshuffle, or inject their own transactions to capture MEV. As long as a validator proposes a valid set of transactions, it will be committed).