Curvance
  • Protocol Overview
    • Click Less, Earn More
    • Protocol Architecture
    • Asset Types
    • Liquidity Markets
      • Borrowing
      • Liquidations
      • Interest Rates
      • Oracles
      • Collateral Caps
      • Bad Debt Socialization
    • Application Specific Sequencing
    • Multichain Architecture
      • Multichain Gauge System
      • Multichain Vote Escrow System
    • New Age Liquidity Mining
      • Protocols
      • Chains
    • How Are New Assets Integrated
    • Specialized Blockchain Integrations
    • Plugin System
    • Universal Account Balance
    • Token Approval Management
    • Lending Risks
  • CVE Token
    • Token Utility
    • veCVE
      • Curvance DAO
      • Revenue Model
      • Emergency Unlock
  • Security
    • Security and Audits
  • Miscellaneous
    • RPCs and Testnet Stability
    • Glossary
    • TL;DR
      • Customer Types and Benefits
    • Brand Assets
    • Weblinks
    • Disclaimer
    • Frequently Asked Questions
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On this page
  • Application Specific Sequencing in Curvance
  • Liquidation Characteristics
  • Incentive Capture
  • Competitive Edge
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  1. Protocol Overview

Application Specific Sequencing

Capture MEV created by Curvance Protocol

PreviousBad Debt SocializationNextMultichain Architecture

Last updated 4 months ago

Application Specific Sequencing in Curvance

The Curvance protocol introduces an oracle-agnostic, MEV-optimized system for handling liquidations, developed in partnership with Atlas. This system integrates orderflow auctions, allowing liquidators to bid for the right to liquidate collateral in the Curvance lending markets. This makes the Curvance platform one of the first to leverage this advanced approach in DeFi.

Liquidation Characteristics

Through app-specific sequencing, the protocol captures Maximum Extractable Value (MEV) by organizing liquidation events to maximize efficiency and value for the protocol. Here’s a simple breakdown of how it works:

  1. Orderflow Auctions: When a liquidation event is triggered, liquidators participate in an auction, bidding for the right to execute the liquidation. This competitive bidding process allows the protocol to receive the transaction validation bid rather than the block builder.

  2. Rapid Execution: The entire auction process takes just 300 milliseconds (3/10ths of a second), ensuring liquidations occur quickly and with minimal delay.

  3. Fail-Safe Permissionless Liquidation: If no winning bid is determined or the winning liquidator fails to execute, a permissionless liquidation immediately takes place to protect the protocol’s stability and assets.

Incentive Capture

Over the last four years, traditional platforms like Compound and Aave have left a combined $180 million in liquidation incentives to MEV searchers. Historically, 95 - 98% of all incentives are given as incentives to block builders to validate their liquidation first. Curvance’s MEV-optimized system is designed to recover as many incentives as possible through auction revenue, significantly reducing the opportunity cost of liquidations while increasing protocol revenue potential.

Competitive Edge

With the built-in fallback mechanism, the protocol remains competitive with other DeFi platforms (Lending Protocols, Perpetual Exchanges, Collateralized Debt Positions Protocols, etc.), which may need to liquidate user assets. Curvance can capture MEV without needing an appchain, minimizing costs, enhancing protocol sustainability, and providing a unique advantage for users and liquidators.