Solver Competition refers to a mechanism in decentralized finance (DeFi) where multiple independent entities, known as “solvers,” compete to find the optimal execution path for a user’s trade order. In crypto, especially in MEV (Maximal Extractable Value) scenarios or intent-based architectures, its purpose is to aggregate liquidity, minimize slippage, and achieve the best possible price for the user by leveraging various on-chain and off-chain sources.
Mechanism
When a user submits an order, it is broadcast to a network of solvers. Each solver proposes a transaction bundle, which might involve routing through multiple DEXs, lending protocols, or even private order books, to fulfill the order at the most advantageous price. Solvers typically bid for the right to execute by offering a portion of the extracted value back to the user or by absorbing gas fees. The winning solution is then executed on-chain.
Methodology
The methodology behind solver competition relies on cryptographic mechanisms to prevent front-running among solvers and to ensure transparent bidding. Solvers employ sophisticated optimization algorithms and access to real-time market data to construct superior execution strategies. This decentralized approach aims to democratize MEV, redirecting potential profits from malicious actors to users and legitimate liquidity providers, thereby improving overall market efficiency and fairness.
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