This Solana swap app is trying to make sandwich attacks more costly
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Earlier this 12 months, Solana’s community congestion created lots of concern over merchants’ potential to land transactions onchain.
At this time, merchants have a a lot simpler time touchdown trades, however the concern has refocused on the costs they get whereas doing so.
Widespread sandwich assaults, whereby refined merchants exploit worth spreads on the expense of unsophisticated merchants, have confirmed to be a long-running and tricky-to-solve difficulty. The Solana swap app and market infrastructure agency DFlow put an fascinating new resolution on the desk when it proposed conditional liquidity, which duties new market intermediaries with separating poisonous from non-toxic order movement.
When a DEX dealer tries to swap one cryptocurrency for an additional, they’re quoted a worth and allowed to set slippage, which is the share that the quoted worth can change after the order is submitted. Solana sandwich attackers exploit slippage by front-running transactions to artificially increase the worth a couple of foundation factors earlier than promoting the asset proper after at a revenue — leaving the consumer with a worse worth. Within the mixture, sandwich attackers could make tens of millions per day.
DFlow proposes including a brand new class of market individuals referred to as segmenters to divide poisonous from non-toxic order movement and restrict sandwich attacking.
Segmenters, which is able to initially be chosen by DFlow, sit between customers who submit the transactions and the DEXs that obtain them, and mainly type good from dangerous transactions. When DEXs obtain these labeled transactions, they’ll then cost greater charges to sandwichers and decrease charges to everybody else.
Conditional liquidity “doesn’t utterly remedy sandwiching” however can cut back it by charging completely different charges, DFlow founder Nitesh Nath stated. “The magnitude of sandwich discount is proportional to the distinction within the greater fee for poisonous movement and the decrease fee for non-toxic movement.”
DFlow already launched a segmenter referred to as DFlow Aggregator and a conditional liquidity DEX referred to as Clearpool.
Segmenters are supposed to create a market for order movement, the place the higher the costs segmenters obtain for customers, the extra order movement DEXs and wallets ship them. Segmenters generate income by accumulating a few of the worth enchancment they supply.
“Conditional liquidity aligns the pursuits of retail merchants, DEXs and the community — a win-win-win for all events concerned. We anticipate conditional liquidity to be one of many large breakout traits of 2025,” JR Reed, associate at DFlow investor Multicoin Capital, stated.
Chris Chung, CEO of the Solana swap app Titan, stated he believes conditional liquidity may give sincere merchants higher costs, however it might be laborious to get DEXs to begin accepting the brand new market construction. DEXs would solely begin altering their charges if there was adequate demand for conditional liquidity from the venues the place merchants are putting orders, however these venues may even need to see DEXs combine the function first.
“It turns into a hen and [egg] downside,” Chung stated in a textual content, including that the demand query could also be partly why DFlow launched its personal segmenter and DEX.
Nath advised me a “handful” of huge wallets and apps have inquired about integrating conditional liquidity, although he declined to say which of them.
