Can Trading Bots Escape the Dilemma of Centralized Custody?
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Can Trading Bots Escape the Dilemma of Centralized Custody?
"Safety" comes first; sacrificing security for efficiency may very likely result in nothing in the end.
Navigating Web3 tides with focused insightsBy Haotian
The recent Trading Bot rug-pull incident has sparked intense discussions. Many are puzzled: why does Trading Bot, a trending on-chain PVP sensation, rely on what appears to be an obviously intelligence-insulting centralized custody model?
Here arises the question: when high-performance blockchains face the conflicting demands of high-frequency trading matching and decentralization, how should this dilemma be resolved? Could @UTONIC_uTON’s AVS+MPC security-enhanced service represent a viable tradeoff?
1) For a long time, users have been wary of anything centralized. However, with the rise of high-performance trading chains, AI agents, and meme-fueled on-chain PVP culture, a new paradigm—bot-executed trades prioritizing performance over purity—has begun to desensitize users to centralization. Regardless of actual security levels, any platform enabling successful buys or sells amid FOMO-driven hype quickly gains popularity.
Yet after incidents like Dexx, many will now prioritize "security," realizing that efficiency gained at the cost of security may ultimately result in total loss.
2) Then why do high-performance public chains such as @solana and @ton_blockchain still adopt centralized matching mechanisms? Why do Trading Bots sacrifice decentralization for efficiency?
Briefly: chains like Ton and Solana emphasize high-performance transaction matching. During peak times, direct interaction between users and chain nodes often leads to failed transactions due to congestion, resulting in poor user experience.
Trading Bots effectively perform off-chain pre-bundling and pre-matching, then collectively confirm transactions on-chain. This allows ordinary users to perceive latency in milliseconds while also reducing the chance of MEV exposure once orders enter the mempool.
The downside is that this pre-matching process requires a centralized account design for batch bundling—aggregating transactions via a single entity rather than allowing dispersed, independent on-chain submissions from individual users. Hence, it depends on a relatively centralized asset custodianship model.
3) This shares similarities with Ethereum's emerging Pre-Confirmation mechanism—the core idea being to add an extra layer of pre-processing and matching before transactions go on-chain. Thus, there exists potential for a tradeoff solution that balances decentralized security verification with high-performance efficiency.
In the following, Utonic presents a Restaking-based AVS security consensus enhancement model combined with MPC (Multi-Party Computation) for shard private key management, exploring a decentralized custodianship solution for Trading Bots. I’ll walk through this logic:
1. MPC is a multi-signature cryptographic asset custodianship scheme where users, the Bot platform, and Utonic’s AVS validators each hold a shard of the private key. If the signing threshold is set at 2/3, routine transactions can be jointly signed by the Bot server and the user, while sensitive operations like large withdrawals require signatures from both the user and the AVS validation network.
This essentially implements layered asset management: granting more authority to the Bot platform during real-time, high-frequency trading, while assigning greater control to the AVS network when it comes to critical asset security functions.
2. The TON blockchain adopts a Workchain sharding architecture, natively supporting a multi-chain structure. As an application-specific chain designed to serve apps, its validation mechanisms must accommodate complex real-world application scenarios.
The AVS mechanism emerging within the TON ecosystem resembles @eigenlayerAVS in Ethereum’s ecosystem—both deliver flexible security outputs to broader, specialized application contexts by providing a dedicated security consensus layer. TON’s flexible validation rules and scalable sharding enable shorter integration times for AVS-level consensus, meeting the high-frequency matching needs of Trading Bots.
3. MPC alone may evoke concerns of centralization—resembling a multi-sig governance committee collectively controlling keys. However, the AVS network is a decentralized, restaked consensus model secured by the underlying chain’s consensus mechanism, effectively inheriting the same level of security as the base layer. Therefore, combining MPC with AVS offers Trading Bots a balanced tradeoff between security and efficiency.
That said, MPC involves processes such as key sharding, multi-party computation, and signature aggregation, while AVS node validation requires message passing and consensus rounds. Compared to purely centralized Bot solutions, this inevitably introduces some degree of latency.
Still, given extreme rug-pull risks, enhancing security consensus—even at the expense of slight efficiency loss—is necessary. Crucially, MPC enables flexible multi-signature management, allowing different channels (fast, standard, strict) to be defined for small, regular, and large transactions respectively.
Moreover, AVS serves as a lightweight consensus framework capable of flexibly leveraging additional node verification capacity. Together, MPC and AVS open up fragmented yet optimized trading use cases, charting a path toward balancing efficiency and security for Trading Bots.
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Haotian | CryptoInsight
