Web 3.0 has a MAJOR problem!!! This could fix it.

🤑 Become an in-demand blockchain MASTER:

The web 3.0 space holds limitless possibilities to revolutionize every single aspect of our online lives from finance to social media there are many different industries that are primed for disruption that being said blockchain technology has its own set of problems that have to be solved and there are a number of hurdles that must be overcome in order for this to

Reach mass adoption and in this video i want to talk about one of the biggest problems that it faces and one solution in particular that can be a game changer for this this is really critical that you understand this that you understand where the space is headed i’m going to talk about all this in this video today as a blockchain developer who works this technology on

A daily basis so if you’re new around here hey i’m gregory and on this channel i turn you into a blockchain master so if that’s interested in then smash that like button down below for the youtube algorithm that really helps his videos out the more people learn about blockchain and make sure you subscribe to this channel and if you learn how to become a blockchain

Master step by step start to finish lend your first blockchain developer job to head on over to dappuniversity.com forward slash bootcamp to get started today all right so let’s get into this let’s talk about one of the biggest problems that the entire crypto space faces and a solution to this problem that’s getting a lot of steam and holds a lot of potential to

Be a real game changer for this so let’s define the problem first this is what’s called minor extractable value or also called maximal extractable value depending on who you ask and the acronym for this is mev okay so you might have seen this floating around online and you might have encountered minor extractable value yourself but let me you know give you a quick

Recaps that you can understand the nature the problems that you can see the solution so basically you know whenever you’re using blockchains um typically speaking it looks like this you know a user is trying to make a transaction to the chain right they submit their transaction and when they do that they give it to the blockchain the blockchain has all these

Different nodes which are just computers that make up the network and depending on which blockchain you use it might have miners it might have validators these are the people that run the blockchain that are responsible for processing that transaction and including it into the chain so let’s say that you were gonna go train a token like on uni swap for example

You know whenever you do this you connect with your wallet and you tell which tokens you have which tokens you want to receive you click swap and that actually submits that transaction to the blockchain and the automated market maker and the back-end powered by smart contracts actually facilitates a transfer because it’s a decentralized exchange or a dex okay and

So whenever you do this your transaction doesn’t instantly go into the blockchain okay so you know anytime you create a transaction it’s going to get included into a block which are really just bundles of records that are chained together to make up the blockchain and before it gets included into a block it goes into a place called the mempool okay and inside the

Mempool are all the other transactions that are waiting to be processed it’s like a queue a pending state uh before they get processed and included into the blockchain whether they’re mined or validated depending on which blockchain that you’re using and so right here when there’s transactions in the mempool you have a bunch of other people’s transactions that are

Inside of there and the miners or the validators who are running the blockchain can see all this stuff okay and they can also submit transactions directly to the mempool whenever they see this and so can any other user that has mempool access and if they can see how your transaction is going to affect the state of the blockchain they can submit their own transactions

Ahead of yours or even directly after to try to take advantage of that and manipulate the outcome and sometimes it actually results in a different outcome than the one that you expected often to your detriment so let me explain how that works so let’s go back to our example of trading a token on uni swap let’s say you bought some uh small cap cryptocurrency and you

Know your price was you’re going to get 50 tokens if you gave it you know uh 50 so it’s peg to the dollar at that point okay so whenever you do that anytime you buy on uni swap you’re essentially affecting the price if you’re buying tokens you’re going to make the price of that token go up for selling it you’re going to make it go down so let’s say that you wanted

To buy some okay well whenever you do that your transactions go to the mempool and somebody can actually submit transactions right before you buy and then also right after you buy uh depending on the amount of gas that you’re going to pay and they can actually profit from your transaction while you’re you know losing money so let’s say that you were going to buy

Cryptocurrency for a certain amount well if they see that the mempool they can basically pay a higher gas fee which is going to incentivize the minor or the validator to do that transaction first that’s how it works and they can essentially buy the cryptocurrency right before you do okay to actually cause the price to go up so whenever you do that it’s going to

Affect the price you’re going to get less you know cryptocurrency back than you thought you’re going to and they can instantly turn around and sell it right after you submitted your order so you’re going to get less and also your cryptocurrency that you’ve got is going to be worth less than what you thought it was going to be after the transaction and that’s

All because they’re able to look into the mempool and see the transactions that are coming in and then submit transactions that pay a higher fee that’s going to give it priority to get it into the blockchain because anybody who’s running the blockchain is going to be incentivized to basically include transactions that are going to make them more money that’s the

Whole incentive problem here is that people who operate the blockchain are basically going to include transactions first that are more profitable for them so it’s a system that can kind of be gamed in this regard all right so that’s one example of minor extractable value there’s others when it comes to like arbitrage and there’s lots of other examples but this is

A really common one that affects most everyday users who might be trading tokens and it’s of course is a massive problem that has to be overcome or for this technology to reach mass adoption and let me talk about a solution today that was a ton of promise for this particular problem that’s gaining a lot of steam so one solution for this is created by chain link

Okay one of the biggest players in the web 3.0 space for their fair transaction sequencing protocol okay so let’s just do a quick recap of chain link of who they are and you know why they’re such a big deal in this space so chain link of course you might have heard the chain link token okay it’s pretty popular cryptocurrency but chain link came onto the scene as

An oracle network okay decentralized oracle network so what problem do they solve for essentially let’s say you know that you want to get some information in your smart contract that’s not native to the blockchain itself let’s say that you want to get the price of you know bitcoin on some exchange or something like that or the weather for example right now like

The blockchain doesn’t know about in this information well essentially you need an oracle for that which is an outside data source and really anything could be an oracle but what you really want is a decentralized oracle because you know if you were to ask me what the weather is i might you know not give you an honest answer i mean i would right but let’s just say

Some you know random person may not give you an honest answer on that or you may not be able to reach agreement on what the weather is or the price is from any given moment you know with because of a race condition so basically chain link uses a decentralized network to do that and they’ve created a number of decentralized networks and protocols to help solve those

Types of problems so essentially instead of asking one person for the information you have a bunch of different people that come to consensus on what the information is and then provides that information to the blockchain you know like like the weather for example so a similar approach can be used to solving the problem of minor extractable value with their fair

Sequencing service okay so this is something that came out or they’ve been working on for uh quite some time now okay but they just did a demonstration of this with a prototype at this smart con event that just happened a few weeks ago and one of the reasons i want to talk about it now is because it’s you know reaching a point where it’s getting a lot of steam and

I think it’s going to be an important solution to watch for in the future so how does it work well essentially he uses an oracle network to enforce transaction order when things go into the mempool so like i was saying before when you go trade tokens on uni swap or whatever it is you know all your transaction go to this mempool and that mempool can be completely

Gained because you know one a person can you know pay a higher fee to get their transaction put it before yours and then reorder the transactions based on you know that financial incentive and so what the oracle network does for fair transaction sequencing is it is it used as a decentralized protocol to essentially enforce that whatever transaction went in first

That’s exactly what’s going to go on first and then nobody can insert anything after that so the reason for that is instead of having one person okay who can include something they have a financial incentive to going first it uses a decentralized network of no code operators to essentially say all right look here’s what the transaction order was and they all agree

On what the order was and we’re going to enforce that and the incentive actually is for each person to act honestly so they can get a reward for representing their version of the truth and the outcome of this essentially is whenever you go trade a token on uni swap nobody can basically insert their transaction before years and manipulate the price to where you know

You actually get back less cryptocurrency that you thought and then they can dump the price a bit later to where any cryptocurrency you actually get back is now worth less than what you thought it was going to be so let’s dig into the details about how it actually does this okay so fair transaction sequencing uses an ordering policy including time of arrival okay so

That’s one approach essentially the time that the transaction arrived that’s the order that it’s going to get enforced on okay another thing that it can do essentially is encrypt the information of the transactions so you don’t actually know what the transaction is going to do okay until after it’s included into a block so that removes the possibility to dig into

What that transaction and does try to decipher it and then put something before it so it’s really anonymous in that sense okay so it also supports different ways that users can submit the transaction to be ordered you know one way is essentially to put transactions directly into the mempool like i was showing before okay so it still hits the mempool and essentially

The uh you know oracle network is responsible for making sure that things you know in that mempool were actually included in the right order and as long as the transaction hits them in pull it doesn’t matter how quickly the transaction is mined or validated in this case depending on the blockchain as long as it eventually does and a real benefit here is that the

User’s transaction can get included at lower gas prices which you might have seen problems in the past during like peak network activity where you know lower gas and transactions won’t even get included so another way that users can submit their transactions is to completely bypass the mempool directly okay so instead of having you know putting the transaction

This mempool they can submit it to somewhere else that’s going to eventually you know put their transaction into the blockchain with the fair transaction sequencing product call so essentially the oracles will batch order the transaction together to a single transaction and the user per cost or greatly reduced and can even be implemented as a roll-up and so some

Different ways and how this can work and has a ton of benefits because you know this fair transaction sequencing uh can really be implemented on any layer one blockchain smart contract platform or layer 2 scaling solution like arbitrim or optimism for example now on a layer one like ethereum for example you know fair transaction sequencing is implemented on a

Per smart contract basis so it’s not like it should apply to the entire blockchain if you build an app then you actually have to implement this in order for it to take place but if you use a layer 2 scaling solution it can be implemented for all transactions like a layer two could just you know include this as part of their default strategy and of course one big

Benefit like i was talking about before is that it can prevent front running on dexes and it can reduce network costs by preventing the gas price bidding wars that you see where people are just paying a bunch of extra money to get there and transactions including first so you have less slippage lower fees and more fair applications alright so that’s an overview

You have chain link’s fair transaction sequencing protocol and why this is such a big deal for blockchain and the future success of this entire space again minor extractable value maximal extractable value whatever you want to call it mev is a real problem for this industry actually you know getting to where we want to go and you know fair transaction sequencing

Is a really good strategy for fighting this problem okay and the reason i want to talk about this now is because you know this came up as smart con just a few weeks ago and the demo of this was you know really good i think this is at a spot where it can start really gaining uh some adoption to fight this problem in the future so i hope you like this video you know

As always smash that like button down below for the youtube algorithm subscribe to this channel if you haven’t already there we have these videos out this is the more people learn about blockchain and if you’re as fast as the technology as i am you want to get your hands dirty how can you get started today waiting on my youtube homepage you can find my free courses

There they like you to be courses but totally free and if you like those and you went to the next step or hey maybe you’ll take a master’s shortcut entirely i should have mastered blockchain step by step start to finish over at dapuniversity.com bootcamp you’d have to be an expert to get started today i’ve helped people with zero coding experience become real world

Blockchain developers in a matter of months so that’s all i’ve got and the next time thanks for watching tap universe

Transcribed from video
Web 3.0 has a MAJOR problem!!! This could fix it. By Dapp University