Build on Ethereum: Ethereum Gas Market and How Gas Really Works

Transcript

hi everyone my name is hung Lee I'm a community manager of idiot Vietnam uh Vietnam is kind of the blockchain community for for support Vietnamese people to learn about the Italian technology today I will introduce you our speaker Julian PA from ethereum fluorescent Julian I thank you for the introduction nice to see everyone hello I'm Julian I'm a research assistant at the ethereum foundation um and today I'll be speaking to you about ethereum Dash markets and about crypto economics in general so I assume that everyone can see my screen now is

that correct well if you don't that's correct I feel free to interrupt me at any point um whenever whenever you have any questions or suggestions uh please let me know so the intention of today's session is to expand your developers toolbox which probably loaded with lots of programming knowledge with some knowledge that you might not see in your day-to-day so for example with some crypto economic Game Theory so mechanism design which is a very theoretical settings some knowledge about the dash Market that may be new and some knowledge about maximum retractable value token economics and

ethereum in general okay so first I'll introduce a bit um what's the robust and census group is which is the research group that I'm a part of and the Boston census group is research departments in the ethereum foundation research and we consist of various researchers and we all do different kind of work so for example Bernie Bay who may join us later does some work on proposed or Builder separation which is an adjustment to the ethereum protocol so this means that the postal really changes and all of the the economic incentives and consequences that come with this needs to be researched well so

for example he published an if research post about this I have learned to Lost into a blogspace future lately these are um basically Financial derivatives on the dash price um these are Financial difficult on the dashboard so if you think that cash price may increase or decrease in the future you could um use derivative so speculate on this um okay so for example if it's in some posts about this so we we also do some research and those kind of directions and another Toledo virus I just gave a talk at devtool about timing games in ethereum and how the incentives align there so we do various research on lots of a very broad scope of economic

incentives in ethereum and to publish these via posts so taught and they're and we'd love to talk to anyone about these tiny topics if you have any questions about those as well but for now we'll dive into crypto economics and we'll have a couple of these sections which are shown with a section header and if you have it we'll stop at the end of each section uh for some questions if you may have those uh but now we'll start with the theoretic uh trip to economics first so what is crypto economics well it's best to explain to using a bit of an analogy let's say that you're a network participants and you're doubting whether you should adhere to the pro skill or deviate and do something else that may

not be what the president wants you to do um you need to make a decision and economic incentives uh can I do some participants do what Their approachable wants them to do and to create these economic incentives we basically have crypto economics for example we can reward you through invite thing issues and block drawers or punish you if you do the wrong thing for example slashing improve state and these are powerful incentives that's allowing people because then what the difference is between crypto economics and regular economics is that we live in a very different environment uh it's a decentralized trustless permissionless environments where people can be fully Anonymous and may not be in it for the

long run they may not play a repeated game and this means that we're in a very adversarial environment so if if people can game the system and make more profit in that way they probably will and how we then align or capture all of the the incentives in this model is by assuming that people are rational meaning that people maximize their own payoffs they they try to make as much money as they can and by by assuming rationality we can also make sure that they make more money or they uh their best rules if they adhere to the protocol instead of if they do something else so crypto economics really starts with with

um mining in Bitcoin and we'll analyze the situation using Game Theory which is a field of study that studies the Strategic Behavior so really you you think about what should I what should be my strategy or what should I do given what other people will do uh and then it's when this is uh you can work this out um in the case where there's a 14 chain and you need to decide on which chain to mine you're rewarded if your blood comes into the the longest chain and we can put this game into um the classic way how to put it in Game Theory using a table um so let's say that you're a minor you

can see yourself on the left side here as individual minor and you need to decide on what chain you're going to mine and the longest chain or on another chain and there are also miners which will select as one one group all of the other Miners And they also decide on what chain to mine together and and then in the table you can see emojis depicting the payoff or utility that's you and the other miners have received from mining on a particular chain so the first Emoji corresponds to your happiness and the second Emoji doors the response to the happiness all of the other miners you can see that all of the other miners are in this case always happy because they always mine on the same chain so their rewards will always be included and you

um are only happy if you mine on the same chain as them you see that if everyone else Minds on longest chain it's best for you to mind on launch chain as well and if everyone else Minds on another chain it's best for you to mine on that other chain as well any channels increase your your Welfare by doing something else from this strategy and this is something that we call an Nash equilibrium in Game Theory which means that there is a steady state in which incentive to deviate because if everyone Minds on the loan exchange new ones might not launch chain otherwise you won't get any rewards but you will pay um for the for the hash power and this holds for every player so no player has a strict incentive to deviate

and we see that in this game there are actually two Nash equilibrium everyone could mine on the the other chain or everyone to join on the longest chain so we still need a mechanism to to um to point people towards the one that we want and in this case that would be the longest chain and for this there's another field of theory called mechanism Design This is the study of the design of strategic situations and you can see it as a way of using reverse gain Theory so instead of I'm using Game query and looking at what your strategy is you look at the situation at hand and see what strategy would people deploy and is this how what what we had in mind when

designing the mechanism uh and in fact you can see that in real life situations there are many mechanisms where um the Strategic situations are not really well for sales and they're about equilibrium um but we need to reach good at Libya and it's also very important to Define what good means so let's say we have an example of uh An Origin of an NFC you could design these in various ways you could have the first price option where the winner of the auction pays your own bid or you can for example have a second price auction or the winner of the auction piece the second highest bid and there are lots of other ways as well you could for example have a reserve price or an Opa alternator where everyone pays their bid and this leads

to different uh strategies of users and all sorts of different outcomes for the auctioneer so it's important to take this in his own into consideration here design but now we'll go back to the basically mining example and we see that we incentivize people um to mine on the longest Chain by the fort Choice rule that we we use and in this case we then go back to one Nash and that we designed for so that's a bit of theory of mechanism and then I'd like to shift to a bit of a different subject but very related towards sharing points and so in in a situation we just had there were only two Nash equilibrium and it may be easy

to design um for for this situation but if you're developing an application or um if you're a training application that should actually be infinitely many in Nash equilibrium and but how can you in this case still coordinates Behavior well I'd like to tell you a story about the art of strategy in this book um or sorry in this in this uh in this series people are two random people are dropped in New York and they need to find each other without their phone or another way to communicate um and this this seems basically impossible they could meet anywhere in the city at any time uh however and people still manage to to do this

because even though all of these meeting places for example is in fact a good strategy you wouldn't regret doing that um if you knew the strategy of the other player because you can't really do better off there is actually a so-called shelling points or focal point this is a nashick film that stands out for a certain way and it turns out that a shelling point to be meeting at the Empire State Building at noon and as the Empire State Building is seen as a very iconical building uh in in New York and noon is a generation as a nice time to meet uh and in this case one national team stands

out for for whatever particular reason meaning that people can actually coordinate Behavior based on this and let's show how this kind of game for you is applied in um in crypto for example with shelling points or tools you may have heard of them uh in principle most data lives off chain for example but who won this during soccer match uh what what the weather is what the time is all those kind of things can be very difficult to determine on chain uh but a way it's made arbitrary data still available on chain is to use jailing points oracles so for example you can let users submit a value and you pay if they submitted the correct value so incentivize correctness and then you

have to set the criteria for correctness and in this case they're also if if user is submitting the outcome of a football match they're in principle and you just want to have the the match that's correct and then these kind of oracles usually threatens is defined as the majority has also voted for this value so you want to say what everyone else is saying and it could be difficult to estimate this if you're not um if you're not um using a right value so in this case the truth to be seen as the sharing Point as in this is the value that people will most likely submit so I'll

also submit this value because then I'll get paid and if I don't I'll probably not get my economic incentives so this is an interesting point in which sharing points are Incorporated and do note that these oracles can be manipulated and have been in the past but it's an interesting and interesting phenomenon okay so that was a bit about the eclipse atomic theory and if you have any questions now's the time so please um feel free but otherwise I will continue with some something about the gas market probably why you came here okay so why do we even pay Das in the first place validates already receive

issuance rewards so we don't really need to pay people to have the security right why why would we still pay people pay block producers well uh you need to give people an incentive to include your transaction people do um use certain computational tools when uh Computing transactions so you need to reward them for that uh for you there's a funny uh tweets from mov refunds saying that he finally made it and with a block with containing only his transaction so this isn't a case where incentives probably weren't high enough to include other transactions and gas fees are paid as a form of details protection if there are no dash

fees there's no cluster congestions for anyone can spam in the chain with arbitrary many transactions eventually filling the chain up entirely uh this is called liveness issues where um validators cannot be online anymore and the Dorset network doesn't work and this would be very bad of course because then your transaction can't get in order and most importantly maybe blood space which is what you're paying for when you use when you try to get your transaction included in a blood is it humidity and the stability is scarce and by economic Market forces this means that you need to pay for it um and this is what I was doing more

so while I put this yes um it's basically privately sets we have a dash limits meaning that there can only be a certain amount of transactions in um and this def limit is is set as a particular um number and other chains may have a higher throughput um but this can be related to the choice of the blockchain trilemma um which means that you can't have decentralization scalability and security all at once uh even though it's not like a complete Ultra Lama you can improve on these kind of things but in general you can't um have have everything at once and still be secure

and ethereum physio preserves the secure blood Space by decentralization so we set the depth limit so such that um lots of validators can participate in the in the protocol uh the requirements for Hardware are very low and meaning that it's Survey decentralized System and thereby we have scarce resource built space and the market determines the price for this clutch space which in the end is the dash price that you pay for your transaction so in effect there are actually two dash markets and I'd like to call them here the market side and the postal side it's maybe easier to start with the postal side it's where every operation has a fixed filter associated with it for

example addition to those three units of Dash and multiplication equals five units of Dash and these costs are are hard coded into vertical and they're relative to one another um so these these costs never change um but then you may wonder why why does the dash leader pay for transactions change that's because there's a market side of the gas markers where you pay if per units of data you consume so for example one addition you always pay three units of Dash that the amounts of each that you pay for those three units of Dash differs per time and this price is Market determined and so this is also why your transactions differ in price that you pay

and this is very essential it's very essential to have this distinction between the two gas markets um in in mind that students really refers to the blood space and if refers to how much you're willing to pay for that block space and an interesting part about this is that basically now all of the computational resources that that you could have RAM storage and all the other things that you can imagine are basically crammed into a black box and all of these things are put together and some cash unit for operation cost comes out and this is done to that and the minimum requirements of a of a computer participating in the Pro skill are very

low um but the social media said slightly inefficient there's a line of research looking at whether um that students can be priced per resource for example uh that there's a different price using Ram than to use in storage okay so um as you may have seen this is a first price option when you submit a transaction you submit how much you're willing to pay in cash fees and if this is enough if your blood if your transaction is included in the block you win and you need to pay your fee but in general economies that I'm doing for you so if they don't like first price auctions this is because it's difficult for user to know what to bid when when you have a certain valuation for

something you have a certain value for getting your transaction included let's say X1 if then you don't want to pay exactly you want to eat because you're not better off so you may pay 0.9 or 0.95 or 0.99 you don't really know exactly what you did so this means people don't have a clear strategy um which makes it difficult for people to bid which is why we in general don't like it so we're searching for an ultra mechanism where users don't have to be strategic strategic but they can just bid their true evaluation introducing the second price watch it this is an option where if you win um you post the highest bid you actually pay the second highest bid so let's say

there's the option for the for the NFC again I base 14 if other people with 10 E5 e for one if I win pair with my bed of 14 East but I only pay the second hardest hit so I do 10. and the the beautiful property of this is that these options are actually government strategy incentive compatible which means that your best strategy no matter what other people do is to bid your true value and this is exactly what we want you to do so that's why we call it incentive compatible and since everyone does this we have a Nash equilibrium and where everyone bits their true evaluation which is great but internally I was sorry an eternity

um before we couldn't have a second price auction in ethereum because um miners can actually include transactions themselves so for example at the top of the slide here you see the wheels transactions that were submitted so for example four transactions paying 10 A7 and 2 in fees but since it's second price auction everyone will pay two in fees meaning that the profit is eight but now I mind if it insert its transaction themselves and paying search in fees and they're like hitting the transnet page two in fees out of the block thus losing some fees but now everything transaction has basic same fees meaning that in total um in terms of their revenue has

increased so in a sense certain price options don't really work in this setting because um still your the bit that you have to place is uh unclear you'll probably pay a higher bid than you're actually supposed to and this is unique to crypto economics this is the adversarial environment that we talked about earlier which really sets it apart from regular economics so a consequence of this is that we used to have priority gas selections a lot and I'm this this setting where at the same price option is no possible as well before uh how currently is uh which I'll talk about a bit later but we each have

priority gas fortunes as a consequence of the first price option so meaning that if there is very valuable blood space for example there is some opportunity to make lots of money uh very fast but continuously outbid each other in the mempool contingency bidding a slightly higher gas price to get their transaction included before the other player because the transaction can for example only be executed once if an NFC shows or one of one and there's only one opportunity to get it and you need to be first and the second pair wins nothing and so this is studied in the flash voice 2.0 Paper and these laid out in the in the draft that you can see before you you see time on the x-axis and that

bit that the people pay on the y-axis and um the orange tri-annuals represents one bolts and the and blue circles represents another bolts and you see that as time goes on the bits get higher higher higher incrementally and the green star is where the ocean is one and the red star is where the ocean is lost this means that the consequence of this and why is that is that those transactions are sent to the mempo and so there's some sort of congestion of the network and also these transactions that pay a very high gasket are probably higher than just regular transactions

there are included in the blood even if they don't do anything even if the the transaction doesn't go through they aren't loaded in the block meaning that blood space is wasted on these um and that other people have to pay more cash to get their transactions included which is of course a waste of resources so a very smart way to work around this is eip1559 um which maybe you've heard of um it's a change to how the gas market works and in a sense it tries to implement the second price which now it first Falls would not be possible in this setting so up until now we've talked about pre-erp 1559 Dash fees and after erp1559 you pay your total fee which made a page

fee and a tip the tip goes to a develop producer for including your transaction remember we need to incentivize them to include their transaction and the base fee which is set by the pro skill is burned meaning that's the the if he's taking other circulation so in this case we still intensify as uh people's included transaction instead of delivering an empty block and there's still the use protection because the cost of submitting the the transaction is still real and there's still an economic shares the auction because at the end it also submitting transaction is still the full cost and the base fee is dependent on how much demand there is

um in in a given time so if there's lots of demand basically goes up and if there's uh less demand the basically goes down and um the goal of this it says we have incentive compatibility again meaning users can fit their true evaluation the tip that they pay is almost always constant and the base fee that they need to pay is simply given so they know they can easily know what's bid and they won't be to to draw and doing that this will be their best uh bet but a common Mission Inception is that erp1559 decreases fees and this is actually not true these would only decrease if there is more blood space or if transactions take

a blood supply space and since erp1559 only changes the B mechanism and not BMS watch base or the how transactions are are words around the system it does not actually decrease although it's a very peaceful mechanism okay so that was the part about the gas market again if you have any questions please let me know but otherwise we'll continue to pass about much much flexible value um which is a very hot topic okay so what is Mev well you may have heard of it you may have seen it and you

may have actually been a victim of it um but I mean he is very difficult to determine or difficult to find it stands for much much that's for Value meaning that other people extract value from the clear Network in whatever way possible and here you see uh a meme about how basically everything can be MVP and this is supposed to It's supposed to show that there's not a clear definition but for our purposes a definition is clearly not necessary I will go by we know it when we see it I'll first give a few examples with me so for example a background this is where um people see your transaction and they know okay

you're going to shift prices I'm going to trade right off to you so for example if you're if you're using eth to buy Bitcoin and you know that Bitcoin is behind that slightly maybe too expensive if it's very big transaction moving prices uh so I'm going to insert the transaction right off to you a background and trading Bitcoin fee uh a more generalized version of this is a sandwich attack where people see a transaction a huge transaction coming in that's going to shift prices they'll insert a transaction before and after basically functioning as a sandwich uh it's a profit from this and then there are also liquidations when uh in a loading proposal if loans are

are over clusterized but they uh but it appears that they may become underclassified soon uh Mev Searchers or Liquidators and can liquidate the loan and take a small portion as a bouncy for their work so there are also different kinds of any V and these are only a very small sample of them um but we'll have a look at what causes Mev so in general users send their transactions to the public mempool meaning that all of their transactions are visible by all the nodes in a network and these transactions leak information about the future states of the network so for example these huge Parts movements that can happen

and which happens when transacted journals executed ultimately meaning that users can actually um other users can see these future States and think okay well they leave a trading opportunity for me open here so I may as well take that um and then and you may say why why aren't transactions that are um executed are sent later in my transaction not executed later than my transaction this is because of the blood pressure is just like where the Bluetooth has full control over the transaction ordering within a block and also which transactions to include and since these blood producers are in rational agents as we assumed before

they try to maximize their selfish payoff using this um monarchical Power that they have and in general maximizing blood periods we pay off pretty well aligned with minimizing the efficiency of your execution and meaning that you'll pay more which money flows to the blood producer um which is a form of Maximum retractable value extracts value from your transactions for their interactions uh and now I'll give a quick case study of how MEP can be used as a tool we'll first start with liquidations which is a common form of Med where as I said

before loans are overlapularized but when prices move against the lender a loan threatens to become undertaleateralized and in this situation the lower needs to be liquidated meaning that Mev searches liquidate the loan and receive a small Bounty for this um but this is actually a case where Mev is used for good loan providers are in this case not um liable to any exposure and they won't be taken advantage of and they only pay a small uh price today maybe search another case of Mev where it wasn't used as Fort Lee is with stable chlorine artifacts that live evm talked about at

FCC um on the open markets you could buy one die so one that should represent one US dollar for a 1.02 uscc which also represent one US dollar so a way to profit from this and because the the die over to the actualization ratio was 1.01 so you could mince one die for 1.01 UCC whereas for example flashlight 100 die swapped to 102 UCC on curve the lateralize 100 usdc to Mint 100 Dia maker then we pay the loan of the 100 die and you're left with one usdc profit so this is a case where there's uh Mev

opportunity or an Arbitrage opportunity which means risk-free profit you can order this atomically um where um falls out too well so in this case only the Mev Searcher benefits from this from this me beam well other people actually created this opportunity um and if you can be used as a tool even though it's it's not easy and it has to be very thoughtful about this um but know that every design should be me aware people will take advantage of of uh certain opportunities if they arise this is again the rationality assumption so that was a quick introduction to a

much more acceptable value or Mev um there are lots of talks about this available online as well if you'd like to learn more about that and now I'll dive a bit into economics hoping that this should be applicable for um some of you working on your own projects so it's ergonomics basically concerns all features affecting the token's coin Jump by utility for users and how much is issued and to whom it's issued how much of the token is burned or directed away and if the target has some interest value or clusterization or whatever I'm sure this is not an exhaustive list of factors into economics but uh I use it to study the tokenomics of ethereum

actually and in this case a third most of ethereum is uh quite synonymous to be with ultrasound money which is a meme magazine it basically says that if Bitcoin has a has a tap Supply uh it's sound money and since if could be uh deflationary or a decreasing Supply it must be ultrasound money okay so the utility of if for example be that allows you to stake uh and participate in the postcode and it also allows you to bid for blotch phase and get new transactions included on E3 and blockchain uh there's amounts of if issued per block and there's an amount of Eve burn

per Blood by the erp1559 fee mechanism again um which is actually how you get to the decreasing Supply and we see that if it's not backed by anything lateral and that this all concerns the if the assets so these are the kinds of things that you could think about um when designing your own token or or nft or a protocol or whatever it's important to think about how how the money flows for your system uh where it ends up and how it for example relates to other domains and if you want to learn more about ultrasound money Justin Jake just gave a talk about this at deftone which I would definitely recommend uh and there's also

the also without money website where you can see all this stage about whether if it's actually deflationary um uh on on their website okay so now it's time for a workshop I've paired a case study for you so I can't actually see you at this point but um if um it's a case where you have to apply some economic theory knowledge and knowledge about the about the presentation I that I just did um and you can do this in teams or individually if you'd like I suggest you doing it in teams um you'll have 15 minutes for it um and the idea is that there's a case

uh and you need to find as many um errors in in logical thinking as you can um so here's the case I hope that you can see this please let me know if it's not readable um but the the situation is that there's a fort of ethereum and there's lots of high people are putting their life saving into it I mean researchers are going it's all over the media but they plan to do things slightly differently than if than ethereum which looks great um and each bullet point is something that they're willing to change and those are all bullets points are going somewhere right uh but think about which are rules are mistake and why and then we'll reconvene in 10 to 15 minutes

and uh we can discuss this case please let me know if you if you don't see the case or or if you can as well

hi guys uh can you see the color from Juliet uh if you uh see player put one on the chat thank you guys hello foreign

yes a number would be a good idea uh yeah I'll actually just change that yes thank you okay we'll reconvene in five minutes

Ninja thank you uh it's great if you could

tell a bit about why three's interact yeah uh okay let's just reconvene uh I'd heard that some people were quite engaged so be great to hear a bit from you um please do follow the initiative of just writing in the chat which one is incorrect and um laugh you could um extend on why you think that three is interacts uh that would be great so you can type in a chess or a torch if that's possible I'd love to hear it [Music] I can't hear you now I don't know if

that's possible oh yeah thank you if you could write it down that would be great as well unless people in nature that's other people as possible yeah uh yeah I can video what you mean

so you're saying that it's the three can't be correct because it's the market side of the price and will be evaluated all together and this is exactly how it goes in ethereum um like we talked about before all of the computational resources are trans together into one in substance but here um in in this new fourth of ethereum they were actually price them all individually and in theory this is possible uh how to do this is still ongoing research it's built multi-dimensional uh Dash virusing or multi-dimensional eop1559 and so Infinity is possible but indeed this is not how eternity works and I'm

curious to hear so thank you for your input I'm curious to hear if other people or or the same person has seen some of the mistakes in that that the new Ford uh would have made if they launched with these changes I'm eventually um is six social intervents um your words for some of the Jazz fees for the least little code

um so in um rewarding for deleting um expired code or expired state is actually something that used to be a part of ethereum it's called erythrop mechanism and this means that um if you delete it you get some parts of the dash fees that will be spent on making this but and in essence this comes down to a blood page feature my research on uh but I can't live it was deleted from from if you're it's it's not in the postal anymore and we also don't live together with eop1559 Erp 1559 means that um the base fee increases so the dash price increases as

their main introductions so people could gain this for example their strategy would be to put the loss of States into uh into the state suggestion function thereby uh blowing up the base fees flowing up at that price and then after increasing diasporous problem cells they could get a refund for the amounts of gas that we spent and they will actually profit from this so This was meant as quite a difficult problems but they need the uh rewarding people for deleting all states uh Tamil live uh together with um there are a few um this was meant as quite a difficult

case that that maybe you won't be able to get all the points uh within time uh that's for example uh doubling the amounts of blood space uh to decrease gas fees is technically possible but it this touches upon the decentralization aspect the blood the amount of blood space is limited to preserved editionization um arbitrarily making more about space means that this will come and this will toast you on your phones of desensitization instead of burning the base fees send it to adapt developers this is also not possible because in this case uh that's

a very first could sponsor you a part of the base fee um so this would be similar to how the envirus option worked what I showed with the with the miners inserting transactions themselves that's a better person if they go sort of the best feedback they could give a parts to the user meaning that your transactions aren't actually as well represented by how it is now in erp1559 uh 0.3 we went through thank you uh Mev is prevented through random ordering of the transactions in the blood this is also not possible because if you do random ordering it basically incentivize people to send as many transactions as possible and if you accept more transactions the woods of your

expectations included in the place where you want it to be included becomes higher and this again weighs more broad space and you don't actually solve the Mev problem setting the base view fixed by 1000 blocks at major parts estimation easier uh in a sense this is not entirely one in in like how we do it now is we set it fixed for one book and you can set a face you could think about setting a transaction if uh but selling information that there is um so much valuation in in base feed that we see now over the one block period if you put it over one fast blood

the mechanism wouldn't really work that well anymore 0.6 we covered uh 0.7 was actually a problem to you uh I'm not quite sure how this would work out apart from centralization concerns um multiplicating liquidity is is uh it's a problem if you split liquidity and you can aggregate amounts view on a Android user but you know 0.7 is this weird case and 0.8 I don't know if you have heard of Roll-Ups this is a different topic uh and maybe some of you have maybe some of you haven't um but if you use Roll-Ups on Roll-Ups this basically doesn't work roll up to compressed data but you can't infinitely

keep compressing data think about compressing trash you can't infinitely keep compressing it at some point it's just not compressible anymore so this is why you can't have actually many Road UPS on top of each other okay so that was the case um I hope you enjoyed it and the slides will also be available after but now we'll go on to some takeaways that you could have from the session um so on the theory front I really like to stress that game theory is a very broad topic and it studies the Strategic Behavior he uses so how would you behave given the behavior of other people a mechanism design then uses reverse Game Theory to design mechanisms so that people won't so that the strategy that

people will deploy matches with what you've lost in mind this is again like the Holy Grail of intensive compatibility that we have you want your systems that you're designed to be incentive to impassable for example a torment people to make here is latency what should we saw in the gas Origins that people incrementally a bit higher you need to be quick for that you need to compute files and this will value that goes out of the system that goes to computers so it goes to Providers just whatever versus people just bidding their true bit what we saw on the second price option where the value stays in the system and it chose

to the auctioneer or its users ATV distributed in whatever way you you see fit so incentive compatibility is really what I'd like to stress for you as a as a thing that you need to think about when designing protocols and then on the gas market side the dash Market is two-sided you have the the pros build side and the market-based side um and the input skill all the gas bills are defined relative to each other and all of the conversations are expand into these dashboards um there's a base fee that's burned for good Vision as we saw the case if you would not burn it it wouldn't work as well and this product will determined if

there's loss of demand the base is higher and if there's less amount of space fees though and this allows you to Simply bid your true valuation so allow your best strategy is to bid how much you actually see it being worth and we covered a little bits of Maximum trackable value and Mev can be extracted from your users so it's very important to make an Mev aware design just absolutely necessary when you're thinking about designing your own applications to do but you have to be really careful with this we can see that the creation it works well but in other situations does not work well so it's really really important to be Mev aware in this case uh and the most important thing to think

about is how will strategic users interact with the systems are designed I made sure that these those these strategies are that you think of all the strategies that people could have uh and that these strategies don't undermine your systems there are no longer inside streets under mining systems and they're also nice short series that undermine your system so here I have a slide some useful links for you if you'd like to go deeper into a group's economics uh in the table you can see some um you can see some um selectives that posts for example papers torch um or posts on crypto economics uh or on specific specific topics knowledge and

at the bottom I have included some of the personal abroad um so I'll share these slides later with you uh if you'd like to see them better uh but that was it uh for now so I thank you very much for your attention uh and if you have any questions uh please let sharing uh and uh if you have any question please there is a hand or put the question on the chat on schedule I'll send you earlier do you have any question

hi Julian I have the first question for you can you recommend for us some book or read or online course about the ethereum yes help us to understand more about the I don't um I I don't know of any butcher courses that really cover uh this world but in each these resources that are that I shared here is a lot of there's very many much cubes economic writing uh yeah well I just published uh some articles about blood-based relatives

which could be very which are very applicable to the cash Market itself if you're more interested into Mev or some proposed Builder separation which I mentioned at the beginning um there are lots of other um paper sharing sharing thoughts about this um so yeah uh oh I see that burning Bay um my colleague just shared something in the chat uh which is cpm.org website which of course very handy thank you um so yeah there are lots of research that you could use and uh yeah you can also close at me if you have any questions answer the question okay I don't know if there are any other

questions uh but otherwise feel free to contact me um privately uh afterwards but it was very nice to to see you and to meet you and thank you for um thank you for having me yeah yeah thank you Julian for the salary and thank you you guys for joining our event uh and uh after the event we will send you the survey form uh to get some feedback and send you our nft and our ebook yeah thank you so much for thank you guys