Pyth Network launches ‘Express Relay’ service aiming to eliminate MEV

Pyth Network PYTH +0.89% , a provider of real-time market data for onchain applications, has launched Express Relay on mainnet, showcased by Douro Labs and Pyth Data Association at EthCC in Brussels on Thursday.

The oracle provider claims Express Relay, governed by the Pyth DAO, provides a decentralized solution to the “long-standing problem” of maximal extractable value (MEV), saving money for protocols and DeFi users.

MEV refers to the maximum value that can be extracted from block production over the standard block reward and gas fees by including, excluding and changing the order of transactions in a blockchain.

Express Relay works by connecting DeFi protocols to a network of searchers through protocol-controlled auctions for valuable transactions like liquidations. It claims to enable protocols to eliminate MEV, significantly reducing the cost of critical operations such as liquidation rewards (the discount offered to searchers to liquidate underwater positions), the team explained in a statement shared with The Block. Searchers are specialized actors who identify and exploit MEV opportunities, and, in the case of Express Relay, include Flow Traders, Wintermute, Auros, Flowdesk, Caladan, Tokka Labs and Swaap Finance, according to Pyth Network.

“Express Relay is a natural progression from Pyth’s core oracle production. It ambitiously serves to reduce value extraction by intermediaries and improve liquidation execution efficiency, effectively tackling this form of MEV,” Wintermute Head of DeFi Tim Wu said in the statement.

Using Express Relay, the searcher with the most competitive bids secures the right to perform the transaction, the team said. This enables searchers to compete more aggressively over transaction values, allowing DeFi protocols to enhance their liquidation reward incentives. It is designed to promote a more equitable DeFi ecosystem, yielding greater savings for protocols that can be redirected toward more productive initiatives or passed on to users.

Express Relay aggregates liquidation and other DeFi transaction opportunities across multiple protocols and blockchains for searchers, eliminating the time and costs of negotiating and integrating with individual protocols to gain access to such opportunities, the team added.

“Liquidations are inherently difficult to execute effectively. With the introduction of Pyth Express Relay, a new protocol is accessible to enable efficient and seamless execution of liquidations,” Flow Traders Global Head of Digital Asset Michael Lie stated.

Pyth Network claims protocols, including Synthetix, Zerolend, Ionic, Synonym, Keom, Jax Finance, Vela Exchange, and Fulcrom Finance have already integrated or begun integrating with Express Relay, enabling them to spend fewer resources on bootstrapping their own liquidator and searcher networks.

"Integrating with Express Relay enhances our ability to provide deep liquidity for on-chain derivatives. By leveraging Express Relay's auction system, Synthetix can streamline liquidations and optimize capital efficiency, further strengthening our perpetual futures markets," Synthetix Core Contributor Matt Losquadro said.

Mitigating the adverse effects of MEV

Trading bots often run algorithms to detect MEV opportunities and capture them. On Ethereum, for example, 526,207 ETH in MEV has been withdrawn since The Merge in September 2022, according to data from Flashbots , a research and development organization that works to mitigate the negative impact of MEV.

MEV is not necessarily a bad thing, helping to drive market efficiency and offering additional incentives. However, it also impacts fairness, decentralization and network costs. Various other solutions and protocols are being developed to mitigate the adverse effects of MEV, such as fair ordering protocols and MEV auction systems, aiming to create a more balanced blockchain ecosystem.

Originally designed for the Solana blockchain, Pyth Network now operates across more than 50 blockchains, including Solana, as well as Ethereum, Optimism, Arbitrum and Base, providing real-time market data for cryptocurrencies, equities, FX and commodities.