Trading

·

January 31, 2024

MEV protection

Anthony Allen

MEV costs DeFi traders millions each month. Get MEV protection as default when you trade using Matcha Auto or RFQ liquidity!

MEV (maximal extractable value) is a name given to the ways inefficient crypto trades can be exploited for profit. Any non-optimized trade submitted to a public mempool for processing can be seen by other market participants, who can queue transactions to profit from your trade’s impact. 

By influencing the order in which trades are executed, MEV bots can extract value from the difference between your expected price and the price your token swap is actually executed at. Matcha can protect from this slippage through Matcha Auto or RFQ, so you can opt out of the MEV tax!

While MEV is a fact of life on public blockchains, it makes sense to protect yourself where possible and get better value on your trades. Let’s see how MEV manifests in your trades and how to protect from MEV with Matcha!

MEV protection

MEV protection is a way to stop attackers from targeting your trades, usually by using private channels to settle your trade. MEV bots don’t get to see your trade until it’s already settled. Different platforms offer different ways of managing MEV protection. On Matcha, you can protect from sandwich attacks, front-running and other MEV attacks by using Matcha Auto with Tx Relay API, or choosing RFQ (Request for Quote) as your liquidity source.

A list of wallets showing how much they lost across multiple sandwich attacks the past 7 days.
Sandwich attack losses over a 7-day period. Many wallets see repeat attacks. Source: Eigenphi.

Protecting from MEV is an important part of being a competitive trader, especially for large-volume trades. While many MEV attacks only extract tens or hundreds of dollars in profit, this can easily become as much as tens of thousands of dollars per trade if the trade volume is large enough, and repeat attacks are common. 

Protecting from MEV with RFQ

On decentralized markets, most trades are processed by Automated Market Makers (AMMs). These are liquidity sources managed by software, and they trade at a price determined by the recent swaps made by other users. Setting the price based on others’ trades means that bots can put their transactions ahead of yours in the block and change the price that you get in your swap. The public mempool and AMMs pricing algorithm means AMMs are susceptible to MEV attacks. 

Instead of using an AMM, there are other ways to conduct your transaction such as Over-the-Counter (OTC) and Request-for-Quote (RFQ) order types. These are similar, as both connect you through a private channel to professional market makers, who have enough liquidity to settle your transaction without relying on AMMs. 

Diagram showing how RFQ orders work to protect from MEV on a DEX
How RFQ orders protect from MEV.

The difference between OTC and RFQ is that OTC trades are generally a direct interaction between a trader and a single market maker, while RFQ is used to get a list of trade offers from multiple market makers, which you then choose the best from. Since no data is submitted to a public mempool, MEV bots won’t be able to target your transaction. Even when your order goes on-chain, the price can’t be changed by the bots because you and the market maker agreed on it off-chain.

Matcha lets you trade with RFQ in both Standard and Matcha Auto modes, meaning you can turn off MEV permanently by selecting RFQ as your liquidity source. Since your trade is being fulfilled by the largest liquidity providers in crypto, you get a great price without any slippage. 

Protecting from MEV with Matcha Auto

While RFQ orders are an easy way to stop MEV, you won’t always find an RFQ option for the token pair you want to trade, especially if it has very low volume. A more flexible option for MEV protection is to use the Tx Relay API, which is part of Matcha Auto.

Swap with Matcha Auto enabled to benefit from MEV and sandwich attack protection
Turn on Matcha Auto in the Market tab of your Matcha trade module to protect from MEV!

Although Tx Relay API is best known for enabling swaps without holding the native token, its design brings other advantages, like slippage protection. With Matcha Auto enabled, you can submit a trade and, Tx Relay API will submit it to a private mempool instead of sending it to a public mempool where bots may target it.

The advantage of Tx Relay on Matcha Auto over RFQ on Matcha Standard is that an order submitted by Matcha Auto can be fulfilled by either an AMM or through RFQ, and still avoid front-running and other MEV attacks, thanks to the privileged relationship between 0x and market makers.

Consistently better value with Matcha

MEV is a major profit drain on traders and can cost thousands per trade at larger volumes. It’s also a big source of frustration, as many DEXs will end up with huge divergence between the price they quote and the price you get. That’s not the case with Matcha, where you know exactly how much your trade will execute for at the time you submit. 

Matcha is more than a DEX, it’s a DEX aggregator, or meta-DEX. It can keep you safe from MEV, and even eliminate slippage altogether! When you turn on Matcha Auto, or manually route trades through RFQ, you connect directly to market makers without being a target of MEV. 

Get the price you’re quoted and save money on your trade. Built by 0x on top of industry-leading infrastructure, Matcha gives you the deepest liquidity across more than 4 million tokens. Connect your wallet and trade on Matcha today!

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Trading

·

October 12, 2023

MEV protection

MEV protection on Matcha DEX aggregator

MEV costs DeFi traders millions each month. Get MEV protection as default when you trade using Matcha Auto or RFQ liquidity!

MEV (maximal extractable value) is a name given to the ways inefficient crypto trades can be exploited for profit. Any non-optimized trade submitted to a public mempool for processing can be seen by other market participants, who can queue transactions to profit from your trade’s impact. 

By influencing the order in which trades are executed, MEV bots can extract value from the difference between your expected price and the price your token swap is actually executed at. Matcha can protect from this slippage through Matcha Auto or RFQ, so you can opt out of the MEV tax!

While MEV is a fact of life on public blockchains, it makes sense to protect yourself where possible and get better value on your trades. Let’s see how MEV manifests in your trades and how to protect from MEV with Matcha!

MEV protection

MEV protection is a way to stop attackers from targeting your trades, usually by using private channels to settle your trade. MEV bots don’t get to see your trade until it’s already settled. Different platforms offer different ways of managing MEV protection. On Matcha, you can protect from sandwich attacks, front-running and other MEV attacks by using Matcha Auto with Tx Relay API, or choosing RFQ (Request for Quote) as your liquidity source.

A list of wallets showing how much they lost across multiple sandwich attacks the past 7 days.
Sandwich attack losses over a 7-day period. Many wallets see repeat attacks. Source: Eigenphi.

Protecting from MEV is an important part of being a competitive trader, especially for large-volume trades. While many MEV attacks only extract tens or hundreds of dollars in profit, this can easily become as much as tens of thousands of dollars per trade if the trade volume is large enough, and repeat attacks are common. 

Protecting from MEV with RFQ

On decentralized markets, most trades are processed by Automated Market Makers (AMMs). These are liquidity sources managed by software, and they trade at a price determined by the recent swaps made by other users. Setting the price based on others’ trades means that bots can put their transactions ahead of yours in the block and change the price that you get in your swap. The public mempool and AMMs pricing algorithm means AMMs are susceptible to MEV attacks. 

Instead of using an AMM, there are other ways to conduct your transaction such as Over-the-Counter (OTC) and Request-for-Quote (RFQ) order types. These are similar, as both connect you through a private channel to professional market makers, who have enough liquidity to settle your transaction without relying on AMMs. 

Diagram showing how RFQ orders work to protect from MEV on a DEX
How RFQ orders protect from MEV.

The difference between OTC and RFQ is that OTC trades are generally a direct interaction between a trader and a single market maker, while RFQ is used to get a list of trade offers from multiple market makers, which you then choose the best from. Since no data is submitted to a public mempool, MEV bots won’t be able to target your transaction. Even when your order goes on-chain, the price can’t be changed by the bots because you and the market maker agreed on it off-chain.

Matcha lets you trade with RFQ in both Standard and Matcha Auto modes, meaning you can turn off MEV permanently by selecting RFQ as your liquidity source. Since your trade is being fulfilled by the largest liquidity providers in crypto, you get a great price without any slippage. 

Protecting from MEV with Matcha Auto

While RFQ orders are an easy way to stop MEV, you won’t always find an RFQ option for the token pair you want to trade, especially if it has very low volume. A more flexible option for MEV protection is to use the Tx Relay API, which is part of Matcha Auto.

Swap with Matcha Auto enabled to benefit from MEV and sandwich attack protection
Turn on Matcha Auto in the Market tab of your Matcha trade module to protect from MEV!

Although Tx Relay API is best known for enabling swaps without holding the native token, its design brings other advantages, like slippage protection. With Matcha Auto enabled, you can submit a trade and, Tx Relay API will submit it to a private mempool instead of sending it to a public mempool where bots may target it.

The advantage of Tx Relay on Matcha Auto over RFQ on Matcha Standard is that an order submitted by Matcha Auto can be fulfilled by either an AMM or through RFQ, and still avoid front-running and other MEV attacks, thanks to the privileged relationship between 0x and market makers.

Consistently better value with Matcha

MEV is a major profit drain on traders and can cost thousands per trade at larger volumes. It’s also a big source of frustration, as many DEXs will end up with huge divergence between the price they quote and the price you get. That’s not the case with Matcha, where you know exactly how much your trade will execute for at the time you submit. 

Matcha is more than a DEX, it’s a DEX aggregator, or meta-DEX. It can keep you safe from MEV, and even eliminate slippage altogether! When you turn on Matcha Auto, or manually route trades through RFQ, you connect directly to market makers without being a target of MEV. 

Get the price you’re quoted and save money on your trade. Built by 0x on top of industry-leading infrastructure, Matcha gives you the deepest liquidity across more than 4 million tokens. Connect your wallet and trade on Matcha today!

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