SushiGuardRouterV01: Formal Proposal

SushiGuardRouterV01

The SushiGuardRouterV01 implements MEV Protection at the protocol level for Sushi users. Profits from arbitrage (via backrunning) are collected on chain in a transparent manner. This will enable Sushi to generate and capture profits normally realized by arbitrage bots, in protocol. The profits are split with Manifold Finance for operating the additional infrastructure and maintenance required to operate it. Below you will find the reference soft proposal, the audit, and costs breakdown by category with further details according to the cost subtype.

Unfamiliar with the existing Sushi Guard implementation? Read more at the sushi documentation website, Sushi Guard | SushiSwap

The router implements features such as:

  • It is gas efficient in all circumstances, meaning trades will always cost less than they do now. The benefit for this is reduced transaction costs.

  • The back running trades that are executed leverage Kashi/Bentobox (as well as Aaave). This means the Sushi ecosystem will benefit in circumstances in which the router executes a backrun transaction.

  • The back running trades are made on-chain, and emit an event, ‘Sushi Guard’. This means that users can track how much the router has made from them, which would enable also Sushi to do account specific reimbursements (the original promise of YCabal if you remember).

Estimated Economic Impact

Preliminary numbers range from $420,000 USD to $1,840,000 USD in profits monthly. This includes all chains that it is deployable to (chains in which Aave is also on).

Model of usage

Soft Proposal Link:

Audit

Specification and Design Document

PDF

see https://github.com/sambacha/Procedural-Approaches-Towards-MEV/releases/download/v0.1.0/Procedural-Approaches-Towards-MEV.-0.1.0.pdf

Costs and Timelines

CommodityStream (Manifold Finance’s parent holding company) is willing to help finance the costs of te routing contract, as the benefits will be enjoyed over a life cycle yet the cost is upfront. We submit this outlay as an initial starting point for consideration, though we feel it fair and approximate. This may be of benefit to the yet-formed SushiDAO vis a vie taxes.

The Notion page includes an ‘Omakase’ cost category that should be ignored for now

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Does the profits benefit the user in any way in its current form?

What is the proposed profit split?

Profit split is 50/50 between Sushi protocol and Fold stakers. It will be up to Sushi to decide how to utilise the profits, some options include incentivising pools, buy back of Sushi tokens and rebating gas costs.

Ok … and how did you arrive at the 420k-1.8M projected monthly profit?