EthCC Voices: Sophie Liu, Data Scientist at EigenPhi

Bettina Boon Falleur
EthCC
Published in
4 min readJun 16, 2023

During her interview, Sophie looks back on one of crypto’s greatest milestones last year, The Merge, and the substantial transformation that followed in the MEV market.

Welcome to EthCC Voices, the Medium Series for the EthCC community. Taking place in Paris from 17–20 July 2023, the conference organised by Ethereum France is regarded as Europe’s leading Ethereum conference for the community by the community!

Sophie Liu

What do you think are the highlight moments in crypto over the past year?

One of the most notable events in the crypto industry over the past year has been Ethereum’s Merge. This development not only has a significant impact on Ethereum overall but also has a specific impact on the MEV market. EigenPhi, a specialized data platform for identifying and monitoring MEV data, has observed a substantial transformation in the MEV market following The Merge, mainly due to the introduction of PBS (Proposer Builder Separation). PBS has introduced new roles and opportunities within the MEV supply chain, further shaping the evolving landscape. However, the MEV incentive has raised concerns regarding the centralization issue of validators. It would be an excellent opportunity to engage in discussions with the community and gain valuable insights on this topic.

What are some new trends you think will emerge over the next 12 months, which ones are you excited about?

I am particularly excited about the implementation of In-protocol PBS and the proposal of MEV-Share. MEV-Boost has temporarily facilitated the realization of PBS, where relays act as a crucial intermediary to separate the responsibilities of block builders and validators, enabling effective communication between them while ensuring trustworthiness. However, relying solely on a gentleman’s agreement for trust in the relay raises significant concerns. For instance, a validator exploited a relay bug to launch an attack on some of the top sandwich attackers. To ensure a higher level of security for in-protocol PBS, it becomes essential to explore more robust and secure approaches. Moreover, I am also highly interested in discussing potential solutions to enhance censorship resistance.

With increasing user awareness of front-running activities by sandwich attackers, protocol designers, and wallet providers are putting significant effort into assisting users in avoiding front-running incidents. They work on initiatives such as creating private channels where sandwich attackers cannot observe transactions or designing protocols like Bancor Carbon that make attackers generate profit by back-running impossible, eliminating the incentives for initiating such attacks. MEV-Share aims to protect retail users and redistribute the MEV rewards back to them. I’m anticipating how this initiative will create a more robust and healthier market environment.

How has being a part of the EthCC impacted you/ your team thus far? Has anything come out of it?

After being recognized as a speaker for EthCC, we received meeting invitations from several partners. In addition, we have been receiving new invites from users who use our product. EthCC is a valuable opportunity to connect with our peers and engage in discussions where we can share our research and findings extracted from our MEV data.

What impact do you think Ethereum updates this year will have on the overall ecosystem, crypto projects, and mainstream adoption? (this can be the Shanghai Upgrade, the upcoming danksharding update, or any other developments you’ve been paying attention to)

We recently investigated the impact of the Ethereum Shanghai upgrade. The upgrade caused significant price fluctuations in ETH and the corresponding LSD token. These fluctuations created a favorable environment for arbitrage traders looking for price differences across platforms trading LSD tokens. Sandwich attackers find LSD MEV opportunities less appealing, and liquidations remain relatively low as users prepare well for the scheduled event. We noticed that the market signal, in the form of price changes, happens before the scheduled upgrade, with the most significant MEV opportunity appearing one day after the upgrade.

Anything else to add? (feel free to share more about the projects you are working on)

EigenPhi, a data platform, specializes in transaction analysis, focusing on on-chain liquidity and MEV data. Our primary aim is to deliver the most comprehensive on-chain transaction analysis tool available, not only analyzing individual transactions but also extending our capabilities to higher-level tasks derived from them. These include asset flow analysis, risk analysis, protocol analysis, abnormality detection, and more. We offer two free products to the public: EigenPhi dashboard and EigenTx.

EigenPhi uses our innovative algorithm to provide real-time MEV transactions. Our MEV identification capabilities cover a significant portion of the market’s MEV transactions. Currently, we include MEV transaction data from Ethereum and Binance Smart Chain. Our product gives real-time visibility into on-chain MEV transactions and delivers statistical analysis of MEV behavior in the market for a selected time range.

EigenTx, another crucial tool available to the public, is an on-chain transaction analysis tool. It visualizes the flow of tokens within a transaction and helps users uncover strategies used in specific transactions. Transaction analysis should go beyond simple token minting, burning, or transfer behavior. Instead, it should determine the transaction’s purpose by combining these elements. This is where EigenTx comes in handy. We aim to increase transparency in on-chain transactions, aligning with Ethereum’s development focus on promoting transparency.

Besides our products, we provide valuable insights and research based on in-depth analysis of on-chain liquidity data. Our research team thoroughly examines the MEV impact on major Ethereum protocols like Uniswap, Curve, CowSwap, 1inch, and Binance Smart Chain protocols like PancakeSwap. We also conduct comprehensive research on risk events resulting from liquidity manipulation on the blockchain.

While we acknowledge that biases can occur when observing things, we firmly believe that ‘Data is a Better Bias.’ Our ultimate goal is to promote the development of a robust and improved DeFi ecosystem, contributing to a healthier and more effective DeFi world.

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