Composable collaborates with Mekatek to introduce coordinated execution to solve cross-chain orderflow
Composable is pleased to announce its strategic collaboration with Mekatek to usher in a coordinated execution system that enables relayers to operate in a sustainable manner through coordination with block builders. Ultimately, coordinated execution efficiently maximizes MEV (maximal extractable value) while subsidizing bridging fees between IBC-enabled chains through Mekatek’s tech stack.
Cross-domain MEV differs based on the ecosystem in which it is occurring. Composable’s role in cross-domain MEV process aims to benefit relayers and users in the Proposer-Builder Separation (PBS) system for cross-chain XCVM messages utilizing the IBC protocol as a transport layer.
XCVM’s role in coordinated execution
The XCVM’s framework enables generalized cross-chain messages supporting various DeFi primitive functionalities beyond swaps, borrowing, and lending. In contrast to Ethereum’s architecture, where the protocol relies on external block builders who are profit-maximizing entities, in Polkadot and Cosmos, the protocol can provide input on how it decides to build the block to maximize efficiency and usage.
The purpose of a coordinated execution system is to provide faster execution for cross-chain activities, a prerequisite for improved user experience. Notably, in the IBC ecosystem, relayers typically operate at a loss and are currently funded by grants. Therefore, the outcome of Composable’s collaboration with Mekatek will equip the IBC ecosystem with a more sustainable, long-term relayer solution while equally impacting the broader DeFi industry.
Sustainable relayer solution: optimizing asynchronous execution
Through this coordinated execution, Mekatek and Composable’s products form an effective pair that can be used to decrease or even eliminate cross-chain bridging fees across IBC-enabled blockchains.
The Hyperspace relayer (our chain-agnostic, event-driven relayer implementation in Rust) will broadcast cross-chain XCVM messages and create abundant orderflow between chains engaging in cross-chain activities. Composable can provide access to Mekatek on this orderflow by allowing relayers to broadcast orderflow directly to the block builders. On the other hand, Mekatek can offer orderflow as a product to searchers who intend to order transactions in the most efficient manner to maximize MEV. Searchers are responsible for identifying opportunities and bidding on blockspace for these transactions. Simultaneously, this process subsidizes the bridging fees as the relayer is incentivized by the searcher.
By doing so, value is redistributed to all actors within the system. Hence, Mekatek is creating a future where value is not “extracted” but instead “aggregated”, meaning that everyone will benefit instead of only a few.
The following diagram displays Composable and Mekatek’s during a cross-chain swap where a user intends to exchange X PICA on Picasso for Y USDC on Juno utilizing the XCVM framework. A block builder picks up the cross-chain message sent by the relayer and auctions it to searchers which is in turn, a tip to the relayer.
Collaborating for a more transparent and efficient cross-chain DeFi
DeFi was built on the foundational principle of transparency. Today, most MEV is not occurring in such a transparent manner. By introducing an open marketplace for MAV, Mekatek is allowing value to be aggregated and distributed in a way that benefits all actors within the IBC ecosystem.
Essentially, we are building and collaborating to enable the transparent capture of MEV between Polkadot, Near, Cosmos, and eventually Ethereum. As part of our collaboration, we plan to implement a permissionless system for cross-chain intent settlement, enabling seamless DeFi interactions across the IBC ecosystem. Since orderflow increases as IBC expands via Centauri, this becomes increasingly important. Thus, as we are working towards bringing IBC everywhere we are also developing ways to capture the opportunities and value that come with the expansion. As we move towards a more connected, IBC-powered future, Composable is looking forward to collaborating with Mekatek to build the first prototype of this system and we are excited for the results of our efforts.
At its core, Mekatek is a team who seeks to do away with the extraction of value at the expense of end users and replace it with a system that encourages the aggregation of value instead. Mekatek has identified 3 key threats which enable the extraction of value:
- Profit centralization — where actors are not fairly compensated for their contributions to the system
- Lack of transparency — where transactions are happening off-chain behind closed doors
- Ineffective political economy — where voting power is accumulated through the offering of outsized yield rather than actually governing the network
These threats have resulted in large players being able to freely extract value from other actors in the system. Mekatek’s solution is to introduce an open marketplace for blockspace where the threats listed above are replaced with:
- Collaboration — where deals happen on-chain
- Agency — where validators choose to opt-in to allow the transparent composition of blockspace
- Sovereignty — where validators and delegators are the governing force of how blockspace is sold
About Composable & Picasso:
Composable Finance (“Composable”) is dedicated to improving the accessibility, quality, transparency, efficiency, and security of decentralized finance (DeFi). We aim to do this by pioneering innovative Web3 user experiences in a trustless, non-custodial, and decentralized manner. Composable’s technology stack enables and combines key services across different DeFi ecosystems and protocols, such as Ethereum, Polkadot, Kusama, Cosmos, and the NEAR Protocol.
Picasso is our layer 1 blockchain acting as an infrastructure layer to pioneer interoperable DeFi solutions, with a native token named $PICA which is available at the Pablo DEX. Picasso is equipped with a robust set of novel DeFi primitives that are built as modular pallets. These pallets are designed to attract liquidity from the broader DeFi landscape whilst promoting interoperability between various ecosystems.
For more information about Composable and how it is architecting the unified DeFi landscape of the future, check out these useful Links: