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Tarun Chitra
@pinged
Going to give a *sneak peak* about this paper w/ @ksk and others to FC before Twitter! There's been a surge of interest in intent-based systems like @uniswapX or CoW Swap — their claim has been to help improve the acquisition of off-chain price data on-chain But do they work?
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DeFi Cheetah
@deficheetah
Would like to know how solvers incur congestion fees due to the lack of inventory, even before they secure the exclusive rights to the orderflow by winning the auction. Don’t they merely simulate the execution such that congestion fees don’t price in?
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Tarun Chitra
@pinged
In a fully permissionless intent system (so nothing that is live right now) where they are slashed if they don't deliver on the intent within some time period, they have to procure _some_ inventory to avoid getting slashed. The real problem is that if they all do this simultaneously they get worse prices
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DeFi Cheetah
@deficheetah
I see, so they execute simultaneously “just in case” 😂😂😂 But that sounds not very efficient if that’s the case lol
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Tarun Chitra
@pinged
Well, its not 'just in case' — its because they entered the auction (and placed collateral/staked) and are trying to avoid the penalties for winning and not delivering (even if its at an unprofitable price)
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Tarun Chitra
@pinged
Think about it this way: If you're a market maker and have 100 possible coin to hold, you likely only are long coins with sufficient liquidity to exit. But for low liquidity coins, if you need to fulfill an order (e.g. on an intent system), you're likely to have to go procure inventory (e.g. where congestion happens)
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DeFi Cheetah
@deficheetah
Then I think it could be split into 2 scenarios: solvers dealing with blue-chip tokens and long-tail tokens (with much less liquidity) The underlying dynamics could be totally different in these 2 separate cases
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