How Our Solver Network Creates a Hyper-Efficient System
Introduction
The open-source nature of blockchain enables unique opportunities for independent players to increase market efficiency while securing their own profit.
We’ve already glimpsed this potential in arbitrage trading, where independent algorithms capitalize on price differences in DEXs’ underlying assets. This not only generates profit but also narrows price discrepancies across protocols. So, how can we elevate this concept?
Imagine a system where independent entities are competing for their own profit while simultaneously benefiting other members of the crypto ecosystem.
Cadence Symphony embodies this vision. We are crafting the first hyper-efficient system where any independent entity, referred to as Solvers, can earn profit by providing our users with the most optimal execution path for their desired outcome (intents).
How does Cadence utilize Solvers?
Cadence is developing a system that allows anyone to onboard as a solver and earn trading fees by providing users with optimal execution for their trades and swaps. But how exactly does this function?
To understand this process, we should briefly revisit the Symphony architecture, particularly how user intents are generated and fulfilled.
On the Cadence frontend, a user specifies their intent (e.g., perpetual trades, swaps) which is broadcasted through our solver router contract to our network of solvers. These solvers then compete to propose the most efficient execution path. The solver offering the best solution will execute the trade on the user’s behalf across one or multiple chains, leveraging account abstraction, sharding, and cross-chain communication primitives.
What incentivizes solvers to participate, and how does Cadence ensure security in such a permission-less system?
Solvers are motivated to provide solutions because, unlike other systems, they have the freedom to set their fees in the proposals sent to users. This creates a true free market, allowing solvers to determine their own fees, while users have the opportunity to accept or reject these fees based on the perceived fairness of the solutions.
Over time, as more solvers participate, the fees will likely become more competitive, ultimately benefiting the user. This is especially true when compared to existing systems that bridge across multiple chains. Instead of the user bridging assets, a solver opens the user’s position with their own collateral on the destination chain(s).
Furthermore, Symphony ensures market efficiency by allowing anyone to become a solver, provided they stake a minimum amount into our protocol. We guarantee the security of our system by slashing the staked amount if a solver provides malicious or non-feasible execution paths. This strikes the perfect balance between permissionless solver onboarding and economically guaranteed security.
A core thesis behind Symphony is a capitalistic and powerful flywheel effect between solvers, protocols and users. As more solvers join Symphony, the competition increases for optimal path routing, which drops fees for users and gives them better trades, leading to more users onboarding, giving more chances for fee capture for solvers, all while driving volume to the most optimal protocols
TL;DR Summary of main benefits:
- Symbiotic relationship between solvers and users, both profit more
- Solvers free to set their own price
- Users free to accept/reject solver’s proposal
- Resulting hyper-efficient system and powerful flywheel
- No more need for user to bridge assets cross-chain, chains abstracted away
- Permission-less solver onboarding via our staking system
- Slashing guarantees honest solver behavior
Join the Band:
Website: https://www.cadenceprotocol.io/
Discord: discord.gg/TnGnyq5kXw
Twitter: https://twitter.com/CadenceProtocol
