Announcing DFlow Chain
Solving private order flow: DFlow's integrated order flow marketplace
Today, we’re excited to announce DFlow Chain, an appchain built with the Cosmos SDK and Tendermint proof-of-stake consensus protocol. DFlow Chain will host decentralized order flow auctions for wallets and trading applications. This significantly reduces the centralizing power of private order flow, an existential problem in crypto.
What is private order flow?
On the blockchain, wallets and apps are incentivized to search for monetization methods and can sell order flow privately to block builders. Block builders with exclusive order flow from wallets can dominate block building and resource-starve other block builders who can’t win blockspace auctions. This flywheel creates a choke point of centralization on the network.
The solution is decentralized order flow auctions.
There is an urgent need for a permissionless and decentralized auction structure for order flow. This evens the playing field by allowing permissionless participation in an auction and for the first time, order flow can be priced fairly by a market-driven process.
Our application-layer approach to decentralized order flow auctions
Determining the fairest price for order flow, and thereby maximizing MEV redistribution, is best done at the application-layer for a special class of transactions.
Why at the application-layer?
Applications like wallets can reason about the intention of a transaction more effectively than validators can because, unlike validators, applications understand the transaction in its context. However, by structure, application layers can only deal with MEV redistribution of a subset of the transactions (e.g. MEV extraction can originate at the block-level).
What is being sold?
DFlow deals with a subset of all transaction types and specifically, DFlow auctions only sell non-toxic, financial order flow from retail traders. This makes up the majority of blockchain transactions and is the class of transactions targeted by toxic MEV like frontrunning.
Our integrated marketplace for order flow
An end-to-end solution for crypto-native brokerages to sell order flow in a decentralized way.
DFlow Chain works seamlessly with any layer-1 and has multi-chain support, starting with Solana and moving to EVM chains, Cosmos, Sui, Aptos, and more. DFlow Chain auctions extract MEV from non-toxic, financial transactions and return that MEV back to users before the transaction ever hits the layer-1 network.
Applications can batch and tranche order flow based on a set of standardized properties such as tokens and order size. These customizable auctions give market makers greater insight into the order flow they receive. In turn, this maximizes the revenue wallets receive from market makers.
Order Flow Dashboard
An intuitive, full-featured frontend for wallets and applications to create and manage order flow auctions on DFlow Chain, as well as analyze order flow execution and revenue.
What it means to solve private order flow at the application-layer
Fair price discovery of order flow is an ideal endgame for all parties involved.
Better for wallets
Decentralized auctions maximize order flow revenue by batching and tranching order flow, which allows market makers to bid more aggressively. Creation of per-source order flow markets, meaning order flow from one wallet is worth a different amount than order flow from other wallets, incentivizes wallets to compete on user experience to attract more order flow.
Better for consumers
Ensuring non-toxic, financial order flow is routed to market makers in an open and fair payment-for-order-flow (PFOF) model means
- Zero-fee trading
- Zero slippage
- No front-running
- Best price execution
- Complete transparency around price execution and improvements
Better for market makers
More information about the order flow leads to more sophisticated trading strategies and stronger guarantees on non-toxicity of flow. Permissionless access to auctions mean market makers can run PFOF strategies without hiring a big sales team.
DFlow is going live soon
In the meantime, reach out on Twitter