Can a Hybrid DEX Model Eliminate MEV Completely?
No model has completely eliminated MEV, but hybrid DEX models can significantly mitigate it. A hybrid model, such as one using an off-chain order book for matching and on-chain settlement, reduces MEV by making the order details non-public until execution.
However, the on-chain settlement phase is still susceptible to MEV, albeit for smaller profits. Complete elimination is difficult as long as transactions must be ordered by a single entity (miner/validator) on the blockchain.
Glossar
Hybrid Dex Models
Architecture ⎊ Hybrid Dex Models represent a convergence of centralized and decentralized exchange functionalities, aiming to mitigate the limitations inherent in each individual structure.
DEX Model
Architecture ⎊ Decentralized exchange models, or DEX Models, represent a fundamental shift in financial market structure, enabling peer-to-peer trading of crypto assets without reliance on centralized intermediaries.
Constant Product AMM
Architecture ⎊ A Constant Product AMM, prevalent in decentralized finance (DeFi), establishes a mathematical relationship between two assets within a liquidity pool, typically expressed as x y = k, where x and y represent the quantities of each asset and k is a constant.