Comparing Auction Methods in DeFi: Dutch Auctions vs Batch Auctions

🔑 Auction Showdown: Dutch vs Batch

By CoW DAO
Apr 22, 2024, 5:49 PM
CoW DAOTwitter

The article examines the shortcomings of automated market makers (AMMs) in decentralized finance (DeFi), such as exposure to miner extractable value (MEV) attacks.​ It then discusses the benefits of auction mechanisms like Dutch auctions and batch auctions as alternatives to AMMs.​ Dutch auctions offer solver competition, MEV protection, but are centralized.​ Batch auctions group multiple orders, enable cross-asset swaps, and incentivize better execution while retaining MEV protection.​ The article highlights CoW Swap as a major implementation of batch auctions, detailing its approach of collecting order intents, conducting auctions for solvers, and executing winning orders on-chain.​ It suggests batch auctions aligning with Ethereum's block auction mechanism make them well-suited for DeFi trading.​

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