Views from ETHCC participants: AMM, cross-chain infrastructure and market fundamentals…

Translation: Vernacular Blockchain

ETHCC Conference (Ethereum Community Conference) is an important annual event in the Ethereum community, bringing together developers, researchers, entrepreneurs, investors and blockchain from all over the world Enthusiasts come together to discuss and exchange the latest technological advances, application scenarios and industry trends. Held in Brussels, ETHCCEthCC 2024 showcased many practical applications, hosted over 500 side events, and showcased the convergence of blockchain and artificial intelligence.

The following are some loose views shared by @magicdhz about AMM (Automated Market Maker), pre-confirmation/commitment and the basics of ETHcc (Ethereum Community Conference):

1. Bullish on AMM

I am firm on AMM extremely bullish stance. They are the only DeFi applications that build entirely new games and incentives on existing traditional financial market structures. For all you LOB (limit order book) enthusiasts, traditional finance is your limit and AMM takes finance to a whole new level and benefits from all the extra attributes of blockchain.

2. Cross-chain intent-centric infrastructure is developing

Cross-chain intent-centric (or call it whatever you like) infrastructure is surging in the background, and the solver network is becoming more and more complex. The transaction supply chain is moving off-chain and/or paying for Ethereum’s security. In my opinion, cross-chain intent-centric infrastructure + solver network + rollup-centric future will eventually lead to AMM self-building chains.

3. About Ethereum

There are efforts to decompose the builder market on Ethereum, and although we don’t know what additional value commitment games may unlock (such as the future of block space), I still can’t imagine an eventual return to MEV -boost (maximum extractable value) type of situation, i.e. "build my most valuable block", there is an opportunity to look into additional value unlocking such as impermanent loss or commitment.

Why does equity always end up concentrating on the validators who say "commit to or include the transactions that build my most valuable block"? If you have some ideas or answers, please comment.

I unfortunately missed a lot of content about the new rust builder for Flashbots and didn’t participate in the TEE (Trusted Execution Environment) related discussions. I feel like there's more to explore here because they're addressing the underlying issue, which is information flow control (which I think is the main theme).

4. About MEV

While there is a lot of talk about more infrastructure and MEV play, there is almost no touch on the fundamentals. On-chain spreads are large, which means the set of possible solver paths (and therefore MEV) is smaller than when the spread is tighter, or is limited by the lack of fundamentals of the coin. Ultimately, it comes down to who is providing liquidity and why.

I think there is huge opportunity to build on the fundamentals. To me, this means that protocols and their DAOs agree on a business model that drives revenue and value and/or liquidity back into their governance tokens. (This is what I will focus on. In particular, I am interested in working with DAOs to identify their revenue drivers and provide relevant economic analysis - with the goal of providing valuable information for governance).

5. Optimistic about pre-confirmation

I am optimistic about pre-confirmation, while the market is more pessimistic about pre-confirmation. Adding more complexity and trust to the base layer is a roundabout way to reduce block times or adopt new consensus mechanisms. That said, I'm bullish on rollup sequencers and other off-protocol infrastructure (like primev or espresso) because they can provide pre-confirmation to users (always a benefit to the user experience) without adding complexity to the base layer.

Overall, the trend of execution moving off-chain is obvious. I don't know how this is going to play out. Randomly thinking of some updated discussions on base layer consensus? And Ethereum’s tendency to serve as the most secure decentralized autonomous organization?

6. Summary

To sum up, even though Ethereum feels very decentralized (because I spent all my time in side activities because the content there is more valuable), there are still too many very smart people Building on Ethereum, this cannot be ignored.

That said, if I am a trader, I feel like the explosive growth is over. There are some very interesting projects that have just raised funding, and Solana continues to be a very attractive place to apply what we've learned on Ethereum. Both offer new places to build apps and appear to be better opportunities for growth. That doesn't mean ETH won't still benefit from ETF inflows, but I don't know how valuable their long-term signals are compared to the core issues that need to be addressed.

Also, I think rollups will become very attractive as sequencers turn on the MEV (Maximum Extractable Value) beast. Time acceleration is bullish and performance will depend on the DAO’s ability to expand the ecosystem and return value to the protocol.

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