Building Economic Trust in Solver-Based Networks – Part 3: Reclaiming Efficient Markets
This article is based on the talk ‘Rethinking Competition in Solver-Based Networks’ given at Protocol Berg in Berlin June 13th 2025. (Watch it here)
In Part 2, we looked under the hood of real-world solver networks like CoW Protocol and Across. What we found was clear:
- A handful of solvers dominate execution and rewards
- Most solvers operate at a loss or barely break even
- Centralization is driven not by better algorithms — but by access to private liquidity, infra scale, and privileged flows
The current landscape is one where the appearance of competition masks the erosion of trust. And the longer these patterns persist, the harder it becomes for new solvers — or new ideas — to emerge. So what do we do now?
Groundhog Day - Haven’t we seen this before?
Before proposing solutions, it makes sense to take a look into areas that that have dealt/ are dealing with similar challenges:
- Traditional Finance (TradFi), which has spent decades regulating against market dominance and conflict of interest.
- Ethereum block building, where similar centralizing forces are playing out — but where responses like PBS (Proposer-Builder Separation) - in the form of Buildernnet or ePBS - are emerging.
Regulation as a Curator of Free Markets — and a Blueprint for Built-In Accountability
When we hear “regulation,” it’s easy to associate it with bureaucracy or red tape. But in healthy market systems, regulation plays a subtler, more foundational role: it curates freedom by keeping markets open, contestable, and fair. In TradFi, regulatory frameworks evolved to prevent dominant players from entrenching themselves, to reduce information asymmetries, and to ensure that coordination doesn’t become control. These functions are just as relevant in the architecture of intent-based DeFi protocols.
In traditional finance, antitrust law limits monopolistic behavior and enforces market contestability. It ensures that even the most powerful market makers or brokers can’t lock out newcomers by cornering access to liquidity or exploiting exclusive relationships. In DeFi, dominant solvers — equipped with deep capital, private liquidity, and privileged venue access — can create very similar exclusionary dynamics. If left unchecked, a few actors could dominate the intent landscape — not because they offer the best service, but because they’ve captured key infrastructure.
Structural separation is another legacy from TradFi that DeFi should take seriously. Regulations like MiFID II or the Glass-Steagall Act were introduced to prevent financial institutions from bundling roles in ways that created conflicts of interest. Yet today’s solvers often handle quoting, routing, simulation, and settlement — consolidating everything into a single opaque stack. Without protocol-level design nudges toward modularity, this consolidation becomes a bottleneck for competition and innovation.
Information asymmetry is another fundamental challenge. In traditional markets, mechanisms like the SIP feed (which ensures everyone sees the same market data) or IEX’s latency equalization are there to curb unfair advantages. In DeFi, fast access to off-chain liquidity or exclusive CEX integrations often determine who wins. Techniques like commit-reveal quoting or shared liquidity indexes can act as DeFi-native forms of latency equalization — not to slow anyone down, but to ensure fair visibility and access.
Regulatory structures also aim to prevent hidden subsidies and backdoor privileges. A trading firm with zero-fee access or CEX credit lines can offer better quotes than competitors — but not necessarily in a sustainable or transparent way. Without clear disclosures or leveling mechanisms, such advantages distort what should be an open market for intents.
Regulation in TradFi doesn’t just police bad actors — it provides the public infrastructure that makes trust possible. Whether it’s licensing regimes, capital requirements, or transparency standards, these mechanisms shift trust from actors to systems. That’s the same direction intent-based protocols should be heading. Verifiable execution, shared mempools, and neutral auction mechanisms are the scaffolding for economic trust.
Traditionally, this has operated through ex post oversight: regulation governs outcomes and enforces fairness through audits, reporting, and supervisory enforcement — typically applied after the fact. To enable this, regulators rely on institutionalized self-regulation: firms are expected not only to follow rules, but to build validation systems that demonstrate adherence.
In crypto, we often talk about “transparency” or “public data” — but that alone doesn’t constitute regulation. What makes crypto special is the ability to replace institutional self-regulation with cryptographic and protocol-level guarantees. In other words: programmed validation and contestability, applied in near real timeIn intent-based systems, some regulatory functions may be taken up by protocol governance — curating incentives, enforcing fairness standards, and protecting market structure. But it's not obvious that this is the right or only place for such functions. Depending on how the ecosystem evolves, these roles might live at other layers: in L1 intent standards, shared execution infrastructure, or inter-protocol coordination bodies.
Right now, what’s more important than the location of these responsibilities is that they exist — and that they are designed to manage the same systemic risks TradFi regulators once addressed: monopolistic behavior, structural opacity, and exclusionary access.
Yet implementing these checks is hard when protocols face conflicting incentives. Rules that promote sustainability — like quote visibility, fair access to liquidity, or solver diversity — may reduce competitiveness in the short term. And since each protocol competes for orderflow, few are willing to make the first move. That’s how we end up in a kind of regulatory coordination failure — what might be called crypto’s Three-Body Problem.
“Crypto’s Three-Body Problem” is about balancing decentralization, efficiency, and user protection — in systems with no central coordinator and no agreed-upon arbiter.
Ethereum Block Production: Solvers Have Been Here Before
Block builders operate in a competitive environment that closely mirrors the dynamics of solver-based networks. Over the past two years builder competition has become increasingly concentrated. A small handful of builders now consistently win the majority of blocks — not necessarily due to better algorithms, but because of privileged access to private order flow, tight vertical integration with wallets and searchers, and advanced infrastructure for simulation and bid submission.
This centralization trend accelerated following Ethereum’s transition to Proof-of-Stake and the introduction of MEV-Boost in late 2022. While MEV-Boost formally separated block proposers from builders, it also allowed builders to aggregate transaction flow and extract maximum value from it. By mid-2024, just a few builders — including rsync-builder, Titan, and beaverbuild — were responsible for over 80% of blocks on MEV-Boost relays.
At the same time, wallet integrations such as Flashbots Protect and MEV Blocker began funnelling user transactions directly to preferred builders, reinforcing a feedback loop of exclusive flow and execution dominance.
Protocol extensions like PBS (Proposer-Builder Separation) and initiatives like Buildernet aim to address this by modularizing the builder role and enforcing more neutral execution, but implementation is still evolving. Solver networks may face the same questions — and may require similar architectural interventions.
Pillars of Decentralized Solving: Shared Infrastructure as a Competitive Equalizer
Today, solving intent-based protocols is expensive — not just in capital, but in engineering. Each solver team builds and maintains its own infrastructure for liquidity discovery, route computation, quote evaluation, and execution. This duplication is wasteful, but more importantly, it creates steep barriers to entry. Only well-capitalized teams can afford to compete.
One way forward is to rethink what infrastructure needs to be private — and what could be public.
Protocols could establish shared primitives like a public liquidity index, a common routing and quoting library, and neutral relay layers. These wouldn’t remove competition, but they’d refocus it. Rather than everyone solving the same baseline engineering problem, competition would center on strategy, specialization, and responsiveness.
Baseline execution could be governed via SLA-style mechanisms, where any party can execute a route under a quality-guaranteed model. Solvers who contribute better or faster routes on top of the shared baseline could earn discovery premiums, rather than having to maintain end-to-end infra to capture value.
This isn’t just a novel design idea — it echoes lessons from TradFi but also systemically important infrastructure.
In traditional finance, public infrastructure plays a central role in keeping markets fair and contestable. From consolidated price feeds (like SIP in the US) to clearing networks and neutral auction venues, the goal is always the same: to prevent dominant players from winning by controlling the rails.
DeFi protocols can follow suit. Shared solving infrastructure, if developed as a public good, levels the playing field and ensures that solver success is based on skill rather than privileged access, exclusive deals, or opaque vertical integration.
It also enables functional role separation, another staple of well-regulated markets. In TradFi, exchanges, market makers, and clearing agents are structurally distinct because bundling them leads to conflicts of interest. In DeFi, solvers are increasingly full-stack: they route, quote, simulate, settle — and increasingly even control the frontend. That consolidation poses systemic risks.
The solution isn’t to ban vertical integration, but to offer credible public alternatives. Shared fee estimators, liquidity indexes, and quoting interfaces make it possible for small or specialized teams to participate, and make it harder for any one actor to dominate.
Just as TradFi uses antitrust tools to protect market structure, DeFi protocols should treat shared infrastructure as a strategic defence: not just for efficiency, but to preserve contestability and innovation in the long run.
Role Separation: Unbundling Routing, Quoting, and Execution
Vertical integration — where solvers handle quoting, routing, and execution end-to-end — creates a larger surface for centralization and limits ecosystem diversity. By decoupling these roles, protocols can encourage a more modular architecture where each component evolves independently, can be benchmarked transparently, and reused across implementations.
Rather than allowing solvers to perform all functions in a single opaque stack, protocols can define distinct competitive models tailored to each role:
This role-based separation helps shift the competitive dynamic away from resource-driven dominance and toward open, strategy-based participation — strengthening decentralization and long-term protocol resilience.
Shared Liquidity Index: Removing duplicated discovery efforts
Today, solvers compete largely on the basis of their internal infrastructure — the speed and accuracy with which they can discover and model fragmented liquidity across venues. This is very inefficient as it creates a lot of duplicated work, without tangible market improvements. A shared Liquidity Index levels the playing field by making real-time market data a network/chain-level public good.
Instead of requiring each solver to maintain its own integrations, liquidity sources themselves — such as AMMs, PMMs and other RFQ venues — publish updates (price curves, token pairs, sizes) into a shared registry. These updates can be signed messages or on-chain events and are consumed by all solvers equally.
This reduces infrastructure overhead, improves transparency, and aligns with the ethos of DeFi: composability and openness.
Public Liquidity Only: Redirecting Private Liquidity to Public Interfaces
Access to private liquidity — whether through private market makers, prime brokers, or exclusive RFQ endpoints — remains one of the most significant advantages for solvers today. To mitigate this, protocols can build on the concept of a shared liquidity index by requiring that all liquidity sources be accessible to all participating solvers and published through the shared index. This would incentivize private liquidity providers to route their flow through the same public interfaces used by AMMs and open RFQ venues, leveling the playing field and reinforcing transparency.
Reclaiming Efficient Markets: From Infrastructure to Trust
Intent-based protocols promised to unlock more expressive, user-centric coordination — but that promise is increasingly at risk. As in block production and TradFi before it, consolidation in solver networks is driven less by superior performance and more by control over infrastructure, liquidity, and privileged access. The appearance of competition masks a deeper structural imbalance.
What history teaches us — from antitrust enforcement to Ethereum’s own builder ecosystem — is that markets do not remain open by default. Contestability must be engineered. Protocols must choose to embed fairness into their architecture: through shared infrastructure, unbundled roles, and neutral access layers that prevent vertical dominance.
Just as TradFi regulation evolved to preserve competitive integrity, intent-based DeFi must develop its own mechanisms — not to impose bureaucracy, but to encode openness. This is about moving from trust in actors to trust in systems: systems that are auditable, modular, and resistant to capture.
The path forward is not about eliminating competition — it’s about re-aligning it. When baseline infrastructure is shared, differentiation moves to strategy, responsiveness, and innovation — not relationship-driven advantages. That’s how new solvers enter, new ideas thrive, and trust in the ecosystem grows stronger over time.
Thank You
A huge thanks to the teams at Flashbots, Barter, Li.Fi & Propeller Heads for the discussions and inspiration!
If you’re a solver, protocol designer, or researcher, we’d love to hear your thoughts and keep the dialogue going!
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