In the rapidly evolving DeFi landscape, Pyth Network empowers smart contract developers with cutting-edge tools to maintain a competitive edge and expand their reach. In this spirit, the Pyth contributors are excited to introduce Express Relay, a new primitive designed to eliminate Miner Extractable Value (MEV), facilitate faster rollouts for new protocols, and aggregate valuable DeFi opportunities for searchers.
Express Relay is a response to the long-held belief that MEV is inevitable and a landmark expansion of the Pyth product line. This blog post provides a comprehensive overview of Express Relay, highlighting its benefits for established protocols, early-stage protocols, searchers, and DeFi users.
To learn more and get started with Express Relay, check out the documentation.
The MEV Problem
Miner Extractable Value (MEV) refers to the profit that miners or validators can extract from reordering, including, or excluding transactions within a block. This extraction results in costs and inefficiencies for DeFi protocols and their users.
Consider how MEV affects the borrow/lending space. Lending protocols must perform liquidations to stay solvent, with searchers competing for blockspace to be the one to perform the liquidation. Yet the protocol must offer sufficient liquidation rewards to attract searchers, and oftentimes, overpays at the detriment of the user experience. Furthermore, most of the value is extracted by miners through tips for the blockspace instead of the searchers doing the work.
On Ethereum’s Aave and Compound (V2 and V3), nearly $150 million in liquidations incentives were given out across these platforms throughout their history, with the majority of this value going to miners instead of the protocols or potentially their users. This outcome is often considered an unavoidable cost of doing business.
Solving these issues can drastically lower costs for protocols, boost capital efficiency throughout the Web3 markets, and give rise to a more competitive and innovative DeFi landscape. That’s where Express Relay comes in.
The MEV Solution
Express Relay introduces a new primitive that directly connects DeFi protocols to a network of established searchers. Isolated priority auctions allow searchers to compete for priority to perform lucrative operations (such as liquidations) on the integrated DeFi protocols. Importantly, the sequencing of these transactions is determined in a separate auction not controlled by the miners, thereby eliminating their extractive role.
By enabling DeFi protocols to auction off priority for these critical operations, Express Relay ensures that searchers can compete more aggressively over the transaction value. One immediate benefit is that DeFi protocols can spend more efficiently on activities like setting liquidation rewards and pass these savings down to stakeholders such as the protocol’s own users.
Express Relay also offers early-stage protocols a solution for accelerating their deployment. Without Express Relay, the developers would have to build their own liquidator network and convince searchers to integrate with their protocol. With Express Relay, new protocols can seamlessly connect with an established network of top searchers to bootstrap their liquidation needs. This advantage fosters a more vibrant and innovative DeFi landscape.
For searchers, Express Relay aggregates the liquidation and other valuable transaction opportunities of multiple DeFi protocols in one place. Searchers can compete for all of these opportunities without having to write bespoke code for each protocol’s interface. By lowering integration costs, Express Relay empowers searchers to operate more efficiently, contributing to a safer and more capital-efficient on-chain economy.
Accelerating Deployment for New Protocols
One of the significant challenges for early-stage DeFi protocols is establishing reliable liquidator networks. Building these networks from scratch requires substantial time and resources, as developers must convince searchers to integrate with their protocol. This process can slow down the deployment and growth of new protocols.
Express Relay addresses this issue by providing a pre-integrated network of top searchers. New protocols can seamlessly connect with these searchers, streamlining the bootstrapping process for their liquidator networks. This capability not only saves valuable resources but also accelerates the deployment and scalability of new DeFi projects, fostering a more vibrant and diverse ecosystem.
How Express Relay Works
Isolated off-chain priority auctions connect DeFi protocols directly with searchers through secure auctions for market efficiency enhancing transactions.
The Express Relay stack comprises on-chain smart contracts and a secure off-chain auction system that facilitates interactions among the following parties:
- DeFi Protocols, which expose opportunities, such as liquidations, to searchers. Searchers then construct and submit transactions based on these opportunities.
- Searchers, which execute liquidations and valuable transactions for Express Relay-integrated protocols.
- Relayer, which provides the infrastructure for the off-chain components of the system.
- Pyth DAO, which owns and governs the Express Relay primitive.
In this system, the DeFi protocols expose their liquidation and other transaction opportunities to integrated searchers through an opportunity server operated by the relayer. The searchers then submit competing offers to perform these operations.
The searcher offer that maximize revenue for the protocol wins the auction, and that searcher’s transaction is then run on-chain. An entry point smart contract manages the permissioning of the transactions’ interactions with the DeFi protocols and enforces payment of the offers before disbursing the value of the offers among the relevant stakeholders in the system.
Express Relay ultimately disintermediates the validators from the MEV supply chain and gives protocols the keys to managing priority around their own transactions—and take back control.
You can learn more about how Express Relay works in greater technical detail by checking out the documentation.
Who Benefits from Express Relay?
Express Relay benefits all DeFi participants by paving the way for a more competitive decentralized finance landscape:
DeFi Protocols can preserve value extracted from transactions, reduce unnecessary costs, and leverage a pre-integrated searcher supply for faster market deployment. Early-stage and mature protocols can bootstrap their liquidation needs faster by integrating with Express Relay.
Searchers need only integrate once with Express Relay to enjoy access opportunities across all the integrated DeFi protocols. This arrangement reduces the opportunity cost of negotiating and integrating with protocols one by one.
DeFi Stakeholders benefit from the elimination of the extractive role of miners in ordering transactions. DeFi protocols connected to Express Relay can pass down the savings down to stakeholders like their users.
The Pyth DAO recently voted to approve the mainnet deployment of Express Relay, the newest Pyth Network product. Express Relay aligns the community’s interest with the needs of increasingly sophisticated DeFi projects.
Industry Leaders Using Express Relay
Express Relay is already live on mainnet on EVM and is supported by a robust network of searchers and DeFi protocols.
Integrated Protocols
Integrated protocols include prominent lending, perpetual futures, and derivatives protocols. Together, these names comprise $1 billion in total locked value (TVL) across 11 blockchains:
- Synthetix (Optimism, Base)
- Ionic (Mode, Base)
- Zerolend (zkSync, Blast, Linea, Manta Network)
- Synonym (Arbitrum)
- Vela Exchange (Arbitrum, Base)
- Keom (Polygon zkEVM)
- Fulcrom (Cronos, zkSync)
- Jax Finance (Taiko)
Integrated Searchers
Express Relay’s searcher network currently includes many of the leading institutional and decentralized participants of on-chain finance:
- Auros
- Caladan
- Flowdesk
- Flow Traders
- Swaap Finance
- Tokka Labs
- Wintermute
Get Started
Integration with Express Relay is permissionless for DeFi protocols and searchers. Anyone can integrate permissionlessly simply by adding just a few lines of code. In-line with the ethos of Web3, integrating with Express Relay or any other Pyth Network product does not require a sales meeting or contract signing. You can get started by exploring the documentation.
- Protocol developers can get started with this integration guide.
- Searchers can get started using this integration guide.
Closing Remarks
Contrary to long-held beliefs, MEV is not inevitable. A paradigm shift in how DeFi protocols and searchers can interact unlocks benefits for all stakeholders involved.
Express Relay plays a pivotal role in reducing costs associated with liquidations and other market efficiency transactions by eliminating miners' extractive role. Express Relay enables DeFi protocols and searchers to seamlessly connect and tap into the other side’s network effects. For early-stage protocols in particular, Express Relay offers a solution for spending less resources in bootstrapping so that founders can focus on other initiatives.
The launch of Express Relay represents a significant step towards making DeFi markets more efficient, competitive, and scalable. Join the discussion and become a part of the Pyth Network revolution.
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