From idea to implementation: Uniswap Foundation Grantee Lily Johnson explores how DEX sequencing rules can benefit DeFi projects.

Today, block builders have an outsized influence in crypto transactions. These entities may censor or reorder transactions, resulting in the potential for suboptimal user outcomes. But it doesn’t have to be like that. Sequencing rules offer protocol developers with a solution: a means to better capture all the value that people create across the DeFi ecosystem.

In 2023, Lily Johnson received a fellowship from TLDR, a Uniswap Foundation-funded initiative dedicated to supporting the edge of DeFi research. Lily’s work looks at how DEX sequencing rules can impact DeFi users. We caught up with Lily to learn more about her work, its potential for onchain apps, and how Uniswap can build on these new infrastructure changes.

How did you get into crypto?

I got into coding in high school because a cute guy was taking a coding class. (Note: He was really bad at coding, but now he’s a doctor, so it’s okay.) I really enjoyed the class, and have been coding ever since. From there, I got a degree in computer science, and my first job out of college was at Meta, where I worked first on a compiler team and then an operating systems team. I left in 2022, when my friend from college introduced me to the NFT community. I took a Solidity bootcamp, joined an auditing firm, and was a part of crypto’s security community for a year and a half before receiving a grant for my work from TLDR.

Last year, you worked on the implementation of DEX sequencing rules as part of TLDR’s grant program. What was your goal with this project?

I found out about TLDR from where all good crypto things are found: Twitter. I was interested in the program because I wanted to find more ways to contribute to the DeFi ecosystem outside of auditing. Last year, I received an implementation grant, with the goal of providing a proof of concept repo of academic research. I had the pleasure of working with Matheus V. X. Ferreira and Mallesh Pai to implement research in the MEV and DeFi space.

My goal was to explore ways to help AMMs with their LVR (Loss Versus Rebalancing) and sandwiching problems. Research had been written by Matheus Ferreira to address sandwiching via verified sequencing rules, and LVR solutions were added later on. The research evolved into exploring how to write sequencing rules for onchain applications in general, which many DeFi projects besides just AMMs can benefit from.

How do you see your work impacting the ecosystem?

The point of research is to create new knowledge. I noticed that my initial research implementation, which was on the application layer, needs support on the infrastructure layer to be gas efficient. I’m currently exploring how to realize infrastructure changes to enable the research I did to be able to exist in production. If I continue to be successful, Uniswap will be able to build on top of the infrastructure changes I’m trying to make.

TLDR was started in 2023 to nurture the evolution of DeFi by supporting new research, and resourcing new voices. What was your experience like as a fellow?

The TLDR experience was awesome. I got paired with great mentors, received financial support, and now feel able to contribute to the larger DeFi academic community.

Through the fellowship, I received support from Uniswap Foundation and TLDR to attend academic conferences, where I was able to learn more about the current state of research, and uncover where industry-focused implementation would be helpful. I had support in preparing for academic presentations with a public speaking coach. And I also had the opportunity to meet with relevant people across DeFi. I was working with TEEs and on AMM Auctions, and was connected to both Andrew Miller and Jason Milionis, leading experts in the space. I was working on Flashbots’ new SUAVE platform, and was able to easily connect with the team, because they’re part of the TLDR community.

TLDR itself feels true to the open and permissionless goals of crypto. It’s open to anyone who’s willing to do the work. The most rewarding aspect of TLDR was that I feel connected to the DeFi community. Before, I felt like an outsider, and now I have friends and colleagues to collaborate with.

I also learned that it’s important not to be afraid to change plans as you figure out more about the state of things. I initially applied to TLDR to study lending protocols, committed to work on an anti-sandwiching implementation, and ended up producing research critiquing Ethereum itself. It’s hard to know what will be useful before you start.

What are you interested in exploring next?

It’s been exciting to see that my research has been well-received. In the week after my TLDR presentation, I saw my followers grow by 50%, I received a job offer, and I’ve received requests for further research opportunities.

Now, I’m working on figuring out how to convert my research into an EIP to address some of the general infrastructure issues I observed when coding the implementation.

If anyone is interested in working on adding new transaction types to Ethereum, hit me up :).

Builder Stories is an interview series that explores the perspectives and projects shaping DeFi’s future. Explore more Uniswap Foundation Funded Grants here.

The views expressed in this interview are solely those of the subject, and do not necessarily represent the Uniswap Foundation’s views. Please be advised that nothing in this post is intended to be financial or legal advice.