Solver networks are execution engines. They translate user intents—like 'swap this token for the best price'—into optimized on-chain transactions, abstracting away complexity for applications like UniswapX and CowSwap.
venture-capital-trends-in-web3
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Why Solver Networks Are the Dark Horses of Web3 Venture Portfolios
Solver networks are the critical, non-tokenized infrastructure powering the shift to intent-based trading. This analysis explains their stealthy value accrual and why they represent a misunderstood venture opportunity.
introduction
THE INFRASTRUCTURE SHIFT
Introduction
Solver networks are the critical, under-the-radar infrastructure enabling the next wave of user-centric applications.
This abstracts away complexity. Unlike traditional RPC providers or indexers, solvers compete in a permissionless market, creating a competitive execution layer that commoditizes blockchain access and drives down costs.
The evidence is in adoption. The success of intent-based architectures in CowSwap and UniswapX, which route billions in volume, proves the demand for this abstraction. The next protocols will be built on solvers, not raw RPCs.
key-trends
THE INFRASTRUCTURE ALPHA
Executive Summary
Solver networks are the critical, under-monetized coordination layer enabling the next generation of user-centric applications.
01
The Problem: Fragmented Liquidity is a $10B+ Tax
Users face slippage and failed trades routing across dozens of DEXs and chains. MEV bots extract ~$1B annually from simple swaps. This is the hidden cost of a multi-chain world.
- Cost: Slippage and MEV drain user value.
- Complexity: Manual routing is impossible for optimal execution.
$1B+
Annual MEV
50+
DEXs to Route
02
The Solution: A New Market for Execution
Solver networks like CowSwap and UniswapX create a competitive auction for filling user intents. Solvers (specialized algorithms) compete to provide the best net outcome, paying users for the right to execute.
- Efficiency: Solvers internalize MEV as user savings.
- Innovation: Drives R&D in cross-domain routing (e.g., Across, LayerZero).
-99%
MEV Reduction
~500ms
Auction Time
03
The Moat: Data is the New Oil
The winning solver network will be a data monopoly. It aggregates real-time liquidity intent across thousands of applications, creating an unassailable information advantage for routing and forecasting.
- Barrier: Intent flow begets better execution, attracting more flow.
- Monetization: Data feeds for structured products, risk engines, and L1/L2 design.
10x
Info Advantage
P0
Protocol Dependency
04
The Vertical: From Swaps to Generalized Intents
The endgame is a generalized intent layer. Solvers won't just swap tokens; they will execute complex workflows: "Bridge these NFTs, stake the proceeds, and mint a derivative" as a single, gas-optimized transaction.
- Market Expansion: From DeFi to all on-chain actions.
- Architecture: Becomes the default OS for user interaction, abstracting wallets and chains.
100x
TAM Expansion
1-Click
Complex Workflows
05
The Bet: Owning the Coordination Layer
Investing in a solver network is a bet on coordination middleware, not a single application. It's the picks-and-shades play for the intent-centric future, capturing value from every application built on top.
- Asymmetry: High upside with infra-like defensibility.
- Leverage: Benefits from, but doesn't compete with, L1/L2 growth.
Infra
Business Model
All
Chain Agnostic
06
The Risk: Centralization vs. Credible Neutrality
The core tension: efficiency requires centralized order flow aggregation, but the network must remain credibly neutral to avoid becoming an extractive monopoly. The winning model will decentralize solver competition while maintaining a lean, efficient core.
- Critical Design: Governance and forkability of the auction mechanism.
- Precedent: Look to Ethereum's PBS (Proposer-Builder Separation) for lessons.
#1
Design Challenge
PBS
Key Precedent
market-context
THE SOLVER ECONOMY
The Intent Revolution: From Transactions to Outcomes
Solver networks abstract user complexity, creating a new, defensible infrastructure layer for executing high-value intents.
Intent-based architectures invert the user-model. Users declare a desired outcome, like 'swap X for Y at best price', instead of manually constructing a transaction path. This shifts complexity from the user's wallet to a competitive network of solvers, as seen in UniswapX and CowSwap.
Solvers are the new MEV searchers. They compete on execution quality, not just speed, by finding optimal routes across DEXs, bridges like Across and LayerZero, and private liquidity. Their profit is the spread between the user's limit price and the actual execution cost.
This creates a new venture asset class. Solver networks are infrastructure, not applications. They capture value from every high-intent flow, from cross-chain swaps to limit orders, making them a non-obvious, high-moat bet in the modular stack.
Evidence: UniswapX processed over $7B in volume in its first six months, demonstrating user demand for intent-based, gasless swaps executed by a permissionless solver network.
deep-dive
THE DARK HORSE
The Solver Value Accrual Flywheel
Solver networks are the unsexy, high-margin infrastructure capturing the value of user intents.
Solver revenue is non-speculative. Revenue comes from executing profitable user intents, not token inflation. This creates a cash-flow positive business model from day one, unlike most DeFi protocols reliant on token incentives.
The flywheel is self-reinforcing. More revenue attracts better solvers. Better solvers improve execution quality. Superior execution attracts more user volume from intent-centric applications like UniswapX and CowSwap.
The market is winner-take-most. Execution quality depends on capital, data, and algorithms. This creates massive economies of scale, where leading networks like Across and Anoma build insurmountable moats.
Evidence: In Q1 2024, solver networks like Across and CowSwap processed over $10B in volume, with solvers earning tens of millions in pure, extracted MEV and fee revenue.
THE INTENT-BASED INFRASTRUCTURE LAYER
Solver Network Performance & Market Share
A comparison of leading solver networks powering the intent-based transaction stack, analyzing their technical architecture, market capture, and economic security.
| Core Metric / Capability | UniswapX (via Uniswap Labs) | CowSwap (via Cow Protocol) | 1inch Fusion Mode |
|---|---|---|---|
Primary Settlement Layer | Private Mempool (Exclusivity) | Batch Auctions (on-chain) | RFQ + Dutch Auction |
Solver Network Model | Permissioned (Curated) | Permissionless (Open) | Hybrid (Permissioned RFQ, Open Auction) |
Avg. Fill Time (Successful Trades) | < 2 seconds | ~30-60 seconds | < 15 seconds |
Weekly Volume (30-day avg.) | $1.2B | $450M | $850M |
Dominant Fee Model | Gas Subsidy + Slippage Capture | Protocol Fee (COW) + Slippage | Solver Tips + Slippage |
Cross-Chain Intent Support | |||
MEV Protection Guarantee | Full (Private Order Flow) | Full (Batch Auction) | Partial (Time-based Encryption) |
Solver Bond / Stake (Economic Security) | Not Disclosed (Curated Trust) |
| Not Required |
protocol-spotlight
DARK HORSES OF WEB3 VENTURE
The Solver Landscape: Key Players & Strategies
Solver networks are the unsexy, high-margin infrastructure arbitraging inefficiencies across DeFi's fragmented liquidity.
01
The Problem: MEV is a $1B+ Tax on Users
Maximal Extractable Value (MEV) is the hidden cost of block space. Front-running and sandwich attacks drain ~$1.3B annually from traders. This creates a toxic, trustless environment where the fastest bot wins, not the fairest protocol.
- Economic Drain: Value extracted from end-users and protocols.
- Network Congestion: Inefficient transaction ordering increases gas costs for everyone.
- Centralization Risk: MEV encourages validator cartels.
$1.3B+
Annual Extract
>90%
Negative MEV
02
The Solution: Professionalized Solver Networks
Networks like CowSwap, UniswapX, and 1inch Fusion abstract execution to a competitive off-chain auction. Solvers (professional market makers) compete to fulfill user intents for the best net price.
- Intent-Based Architecture: Users specify what they want, not how to get it.
- Batch Auctions: CoW Protocol aggregates orders to eliminate on-chain arbitrage, capturing that value for users.
- Guaranteed Settlement: Users get the quoted price or the transaction fails, eliminating slippage risk.
~$250B+
Total Volume
>$1B
Saved for Users
03
Key Player: Cow Protocol & the CoW Swap AMM
Cow Protocol is the canonical intent-based DEX. Its core innovation is Coincidence of Wants (CoW), enabling peer-to-peer trades within a batch before resorting to on-chain liquidity.
- Pure Surplus Maximization: Direct user-to-user trades have zero fees and no price impact.
- Solver Competition: Dozens of solvers (e.g., PropellerHeads, Barter) compete in a GPS (Gas Price Oracle)-informed auction.
- Cross-Chain Future: CoW Swap is expanding via layerzero and Across, making intents chain-agnostic.
10,000+
Traders/Day
~$2B
Monthly Volume
04
Key Player: UniswapX & the Aggregator War
UniswapX is Uniswap Labs' answer to the solver model, designed to eventually replace the classic router. It uses off-chain Dutch auctions and fill-or-kill orders.
- Aggregator of Aggregators: UniswapX solvers can source liquidity from any on-chain venue, including competitors.
- Gasless Trading: Users sign intents; solvers pay gas, abstracting complexity.
- Strategic Moats: Leverages Uniswap's $4B+ brand and liquidity to bootstrap network effects, directly challenging 1inch Fusion and CowSwap.
0 Gas
For Users
100%
Fill Rate
05
The Cross-Chain Frontier: Intents as Primitives
The endgame is a unified intent layer across all chains. Projects like Across and layerzero are building generalized messaging layers that solvers can use to fulfill cross-chain intents atomically.
- Unified Liquidity: A solver can source input tokens on Ethereum and deliver output tokens on Arbitrum in one atomic operation.
- New Business Models: Solvers become cross-chain market makers and liquidity routers.
- Infrastructure Play: The value accrues to the intent standard and settlement layer, not individual DEX frontends.
10+
Chains Supported
<60s
Cross-Chain Settle
06
Venture Thesis: Capturing the Execution Layer
Solvers are a pure software play with exponential scaling and >90% gross margins. The winning networks will capture a fee on every on-chain transaction, becoming the TCP/IP of value transfer.
- Recurring Revenue: Fees on $10B+ daily DEX volume.
- Defensible Moats: Network effects of solvers, liquidity, and user trust.
- Regulatory Arbitrage: Infrastructure is harder to regulate than application-layer protocols.
90%+
Gross Margin
10,000x
Scale Potential
counter-argument
THE INFRASTRUCTURE TRAP
The VC Blind Spot: Why Tokens ≠Value
Venture capital over-indexes on application-layer tokens while ignoring the foundational solver networks that capture the real economic value.
Venture capital's application-layer bias creates a systemic blind spot. Funds chase governance tokens for speculative upside, but the protocol's utility value accrues to its infrastructure. The solver network executing the core logic, not the governance token, captures the fees and data.
Solver economics are counter-intuitive. A protocol like UniswapX or CowSwap appears to be a DEX, but its competitive edge is the solver auction. The token governs, but the solver network's MEV extraction and routing efficiency generate the sustainable revenue.
Evidence is in the data. Across Protocol and LayerZero process billions in volume; their value is the validator/solver network's ability to guarantee execution, not the speculative token. The infrastructure that secures intent fulfillment is the dark horse asset.
risk-analysis
THE DARK HORSE TRAP
The Bear Case: Risks to the Solver Thesis
Solver networks are the critical middleware for intent-based systems, but their path to sustainable value capture is fraught with existential threats.
01
The Commoditization Trap
Solving is a pure execution game. The moment a more efficient algorithm or cheaper capital source emerges, solvers are swapped out. This creates a race to the bottom on fees and turns them into low-margin utilities.
- Zero Switching Cost: Users and protocols (like UniswapX, CowSwap) are indifferent to which solver fills their intent.
- MEV as a Subsidy: Today's profitability often relies on extracting MEV, a revenue stream that protocols are actively working to eliminate.
<0.1%
Typical Fee
~0s
Loyalty
02
Protocol Capture & Vertical Integration
Why outsource solving when you can own it? Major intent-based applications will internalize their solver logic to capture the margin and ensure reliability, mirroring how CEXs built their own matching engines.
- Unbundling Risk: Aggregators like 1inch or native intent protocols could develop proprietary solver networks, sidelining independents.
- Data Moat: The solver with the best execution data becomes a threat, incentivizing the application layer to cut them out.
100%
Fee Capture
Closed
Ecosystem
03
Centralization of Capital & Trust
To win auctions consistently, solvers need massive liquidity and low-latency infrastructure. This favors well-funded, centralized entities, undermining the decentralized ethos and creating new points of failure.
- VC-Backed Cartels: A small oligopoly of well-capitalized solvers could dominate, replicating traditional finance's structure.
- Censorship Vectors: Centralized solver clusters could selectively ignore transactions or be compelled to comply with regulations.
Oligopoly
Market Structure
Single Point
Of Failure
04
The Complexity Bomb
Intents abstract complexity from users and push it onto solvers. As cross-chain intents (via LayerZero, CCIP) and exotic DeFi strategies grow, the operational overhead and risk of faulty execution explode.
- Unmanageable Risk Surface: A solver guaranteeing execution across 10 chains must manage 10x the bridge, RPC, and liquidity risks.
- Liability for Failure: Who is liable for a failed, multi-million dollar cross-chain intent? The legal gray area is immense.
10x
Risk Surface
???
Liability
05
Regulatory Ambiguity as a Weapon
Solver networks that consistently handle large, cross-border value flows will attract regulatory scrutiny. Their classification—as mere tech, brokers, or even unlicensed exchanges—remains dangerously unclear.
- KYC/AML on Solvers: Regulators may demand solver-level transaction monitoring, breaking pseudonymity and adding fatal overhead.
- Geo-Blocking Enforcement: Solvers may be forced to implement compliance filters, fragmenting global liquidity pools.
High
Scrutiny Risk
Fragmented
Liquidity
06
The MEV-Burning Endgame
The entire economic model of many solvers is predicated on capturing and keeping MEV. The ecosystem's relentless drive to burn MEV (via PBS, SUAVE, encrypted mempools) is an existential threat to their P&L.
- Revenue Erosion: If most MEV is returned to users, solvers are left with microscopic protocol fees.
- Innovation Trap: Solvers investing in advanced MEV extraction are building on a foundation the ecosystem is actively dismantling.
→0
Revenue
Burning
Ecosystem Trend
investment-thesis
THE INFRASTRUCTURE PLAY
The Dark Horse Investment Thesis
Solver networks are the capital-efficient, defensible infrastructure layer for the emerging intent-centric stack.
Solver networks are capital-light infrastructure. Unlike validators or sequencers, solvers require minimal staked capital. Their value derives from algorithmic intelligence and operational efficiency, not token lockup. This creates superior capital efficiency for investors.
They capture value from fragmentation. Every new chain and rollup fragments liquidity. Solvers in networks like Across, CowSwap, and UniswapX arbitrage this fragmentation. Their economic moat is complexity, which deepens with each new L2.
The business model is fee-based, not inflationary. Revenue comes from solving fees, not token emissions. This aligns with sustainable Web3 economics, unlike many proof-of-stake or DeFi yield models that rely on new token issuance.
Evidence: The Across solver network facilitated over $12B in bridged volume with zero solver slashing or staking, proving the capital-light model works at scale.
takeaways
THE SOLVER THESIS
Key Takeaways
Solver networks are the critical, underappreciated infrastructure enabling the next generation of user-centric applications.
01
The Problem: Intents Are Inherently Fragmented
User intents (e.g., 'get the best price for 100 ETH') are broadcast across fragmented liquidity pools and chains. Aggregators like 1inch and UniswapX rely on solvers to solve this complex optimization puzzle.
- Market Inefficiency: Billions in MEV is extracted from suboptimal routing.
- User Friction: Manual execution across Layer 2s and Ethereum is impossible.
$1B+
Annual MEV
10+
Chains to Route
02
The Solution: A Decentralized Solver Network
Networks like CowSwap's CoW Protocol and Across create a competitive marketplace where specialized solvers compete to fulfill user intents.
- Economic Flywheel: Solvers earn fees for optimal execution, reinvesting in better algorithms and infrastructure.
- Cross-Chain Native: Protocols like LayerZero and Axelar enable solvers to atomically route across any chain.
~500ms
Auction Time
99%+
Fill Rate
03
The Moats: Data & Capital Efficiency
Winning solvers build unassailable advantages not in code, but in operational intelligence.
- Proprietary Data: Historical flow, gas price predictions, and liquidity maps create a feedback loop.
- Capital Light: Solvers like those in UniswapX don't hold inventory; they are pure execution engines.
10x
More Data Points
$0
Inventory Risk
04
The Vertical: From DEX to Everything
Solver logic is the kernel for all complex on-chain actions, moving far beyond simple swaps.
- Limit Orders & TWAPs: Time-based execution requires sophisticated scheduling.
- DeFi Lego: Composing loans on Aave with yield strategies on Curve in one atomic bundle.
- The Endgame: A generalized intent layer where solvers fulfill 'any' on-chain goal.
1000x
More Intents
5+
Protocols per Tx
05
The Risk: Centralization & Capture
The solver role is naturally prone to centralization, creating systemic risks that protocols must actively mitigate.
- Oligopoly Risk: A few well-capitalized solvers (e.g., Bebop, Flow Traders) could dominate.
- MEV Re-Centralization: The same entities capturing MEV today could become the dominant solvers tomorrow.
>60%
Top 3 Share
Critical
Sys. Risk
06
The Bet: Owning the Execution Layer
The value accrual shifts from the application front-end to the execution back-end. The winning solver network becomes a toll bridge for all on-chain value flow.
- Fee Machine: Captures a slice of every optimized transaction, akin to a high-frequency trading firm.
- Infrastructure Primitive: As essential as the RPC or sequencer layer for the intent-centric future.
$10B+
Potential TVL
Protocol
Revenue
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