Greenlight Algorithm
A greenlight is permission given by the Coordinator for a Keeper to move forward with an action. Rook Keepers bid on opportunities to facilitate actions for users within the ecosystem. The Coordinator collects these bids and greenlights one or more Keepers to facilitate the user’s trade or liquidation.
The Rook DAO manages the Coordinator’s greenlight algorithm to find a healthy equilibrium where all ecosystem participants (Keepers, market makers, users, etc) share adequate profit. To find this healthy equilibrium, a variety of factors are taken into consideration.
Many Keepers may bid on an opportunity to facilitate trade for users. Each bid will have its own unique factors that weigh into its value which is considered by the greenlight algorithm.
Keepers place bids in ROOK, the higher the bid the more likely they are to be greenlit. This adds upward bid pressure encouraging Keepers to bid higher which results in more value flowing to the user.
A ledger of each Keeper's actions is recorded and converted into a reputation value. This represents the value of this Keeper to the users within the ecosystem. Good behavior, such as fill orders, is combined with bad behavior, such as failing to fill orders or cheating, to quantify a reputation. The higher a Keeper's reputation the more likely they are to be greenlit. This encourages Keepers to behave. Bad Keepers will be blacklisted.
Randomness is applied within the greenlight algorithm to prevent Keepers from grim triggering or gas auctioning each other. With the presence of randomness, Keepers don't always need to be the highest bidder in order to win an auction. This acts as downward bid pressure forcing Keepers to take a profit while also preventing them from grim triggering each other.
Users prefer to have their actions facilitated in full. So the greenlight algorithm prefers bids with larger fill quantities over smaller ones.
In order to incentivize fully committed Keepers to provide to stake ROOK and consistently facilitate trades for users, the greenlight algorithm prefers Keepers who have more staked ROOK over those with less staked ROOK.
Last modified 1yr ago