Please describe your proposed solution.
Every decentralized exchange (DEX) within the Cardano ecosystem operates its unique 'processor' to manage end-user transactions. To elaborate, regardless of the DEX model in question—whether it's one of the predominant options: automated market makers or order books—each project must employ a specific bot. This bot is responsible for scanning the blockchain for orders, deciding which orders to process, and then creating and submitting a transaction to fulfill these orders. Two key stages can be discerned in this process:
- The selection of orders
- The transaction creation phase
Typically, these 'processors' are not accessible to the general community.
These stages are deemed critical since the end-user relies on a private system to which they have no access. It is difficult for a user to comprehend why their order has not been processed, let alone understand how to construct their own transactions in an attempt to circumvent these processors.
The principal concept underpinning the Smart Order Routers (SORs) framework involves the collection of orders, their selection, and eventually, the construction and submission of corresponding matching transactions. The term 'framework' is crucial here, as a primary feature of the SOR is the capacity to implement various order selection strategies, tailored to the diverse actors within the blockchain ecosystem. While some individuals might choose to optimize their arbitrage, others may prefer to collaborate with the community, accepting minimal or no profit margins. Furthermore, the framework offers the possibility of devising other strategies or altering existing ones. In addition to this, the SOR will encapsulate the transaction creation logic, enabling users to concentrate on implementing and devising strategies. This is made feasible by the open-source nature of the framework, allowing the community to run, replicate, enhance, and extend it as needed.
How does your proposed solution address the challenge and what benefits will this bring to the Cardano ecosystem?
This new Cross-DEX open sourced framework will introduce a novel and powerful tool to the Cardano ecosystem. This framework will empower the Cardano community to run their own Smart Order Router (SOR) capable of matching orders from multiple DEXes. This is will transform the entire DeFi ecosystem on Cardano bring connecting DEXes and aggregating liquidity together. As a result, bringing better financial stability and capital efficiency to the ecosystem. This is an unsolved problem in most other blockchain, therefore the long term impact of this proposal has the potential to make Cardano the best DeFi environment in the industry!
How do you intend to measure the success of your project?
The Smart Order Routers (SOR) framework introduces a novel concept to the ecosystem. In the immediate future, this framework will empower users to operate their own instances capable of matching orders from GeniusYield DEX, among other DEXs. Notably, given the innovative nature of this proposal, it could serve as a new gateway for users interested in implementing and executing new matching strategies, circumventing the initial technical complexities associated with the Cardano blockchain.
Please describe your plans to share the outputs and results of your project?
This SOR framework will be open-sourced and available on Github for the community to track progress and verify that deliverables are met. We commit to the milestones based reporting and keep the community updated via our social media channels, as well.