MEV hurts Ethereum users and may be here for some time »alt =» MEV harms Ethereum users and may be here for some time 101 ″ class = »content-img» /> Source: Adobe / Igor Faun

One of the hottest debates in Ethereum (ETH) right now is about mining mining value (MEV). This is the practice of miners who request (or are paid per order) transactions to perform initial or subsequent execution operations performed by other users.

MEV was documented as early as April 2019 in a paper written by researchers (mostly) from Cornell University , who wrote that “MEV raises a

threatens Ethereum today «. Since then, the practice has only become more prevalent, particularly with the general growth of smart contract platforms, DeFi, and decentralized exchanges (DEX).

Hypothetically, MEV can also be seen on the Bitcoin (BTC) network, but inherently it is considered less exposed to MEV than blockchain like Ethereum.

But how much is a MEV problem? Well, opinion is mixed, depending on the field you apply for. Researchers say this is a serious problem that will be difficult to correct, while more Ethereum-aligned figures are noting that its effects are fairly cararate and fixable.

Define the scope of the problem.

Speaking with independent researchers who have studied MEV, they almost unanimously agree that it is a serious problem on today’s smart contract platforms.

My academic group coined the term in an article studying its rise among bots in 2019. At the time, we documented substantial and in some cases deeply disturbing effects, including many users asking online arbitrageurs to pay back money. they couldn’t pay. lose, ‘said Professor Ari Juels, co-author of the 2019 paper with colleagues at Cornell (and Carnegie Mellon , University of Illinois Urbana-Champaign and ETH Zurich ).

Juels added that MEV “has become much more widespread and has been aggressively exploited since then.” This is an impression shared by Ittay Eyal, an assistant professor at the Technion – Israel Institute of Technology , who has also researched and written about the problem.

“MEV is very real and it is causing real damage. It directly increases the user experience while using DeFi, as a portion of your earnings is diverted to armies of robots, “he said.

Basically, MEV involves reordering transactions to benefit from confirming your transactions before or after other transactions. For example, a user may pay a ridiculously high gas tax to confirm the purchase of some ETH before the price of ETH rises (or vice versa), so that they can sell it at a profit.

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“Miners prioritize the order of transactions in a block to accept the highest gas supply first. Arbitrators are willing to pay very high prices to prioritize their transaction in this queue and may enter a bidding war that turns into a negative externality for everyone, “said Lex Sokolin, chief economist and co-director of fintech. Global on the Ethereum-centric blockchain. ConsenSys company .

Not everyone agrees that MEV is a very serious problem, in the sense that it substantially interferes with its normal operation.

“As for the ‘damage’, I’d say it’s fairly cararate now – most MEV draws occur in the form of initial run DEX trades to benefit from slippage and we’re already looking at some fixes (eg Red Taichi , MistX , etc.) to mitigate it. re are more harmful types of MEV, but I am not aware of cases seen on the Ethereum network, “said Ethereum developer Tim Beiko.

According to Flashbot (an organization founded to push MEV in a more positive direction), miners have made around $ 109 million in earnings from MEV to date. However, this is an MEV organized through the Flashbots platform, so the actual profit from all MEV businesses is likely to be higher.

Can the MEV be good?

existence of Flashbot indicates, at least among miners and some other parties, that MEV can be used forever. And there seems to be some degree of agreement that MEV exists on a spectrum, with some examples worse than others.

“MEV is a blanket term encompassing arbitrage that is both ‘good’ and ‘bad’ in terms of the resulting transaction costs for users. Distinguishing good from bad MEV is an open research problem, ”said Ari Juels.

Some industry players have suggested that MEV is a likely response to the Ethereum Upgrade Proposal (EIP) -1559, which will reduce miners’ fee income and force mining pools / companies to seek alternative sources of income. However, for Ittay Eyal, the loss of revenue from EIP-1559 does not really justify MEV.

“EIP-1559 is expected to reduce miners’ revenues by burning a significant portion of the transaction fees paid by the user. I don’t think the solution is to take users’ money in a more subtle way. Instead, the (minting) rewards can be increased or the number of miners would be reduced, reducing Ethereum’s ecological footprint, “he said.

On the other hand, people who work within Ethereum have suggested that MEV is practically a ‘fact of life’ and that the problem is not to eradicate it completely, but to find ways to reconcile it with the broader goals of Ethereum.

“ debate on MEV is how to create groups of transactions that pay miners a fair value for giving up the gas auction for a different mechanism. It is not that the miners are doing anything coercive or uneconomic, these are already endemic problems. general, “said Lex Sokolin.

He added that in the sense of finding the optimal / fairest mechanisms to classify the blocks, MEV does not pose a threat as such.

“It’s about devising mechanisms to discover higher gas prices and making ordering of transactions on the Ethereum mainnet a well-understood topic. I believe that the work done by Flashbots has been very beneficial for the ecosystem and will continue beyond EIP-1559 and the step to participation, “he said.

Tim Beiko has a similar opinion, suggesting that we need to find ways to live with MEV while reducing its worst effects.

“I think my take on MEV is that we should try to minimize it, but then we should try to democratize access to capture whatever MEV is left. This appears to be the ‘least worst’ option, with the alternative that MEV mining is only possible from the largest block producers / miners, “said

Eradicated or minimized?

question is: to what extent can the MEV be minimized?

“I think there are technical approaches that can bring us very close to a fair ecosystem by preventing miners from reordering transactions to mine MEV. se include safe causal order – roughly, encryption and decryption of transactions only after they have been sorted – and fair order – roughly, ordering transactions in terms of reception time, “Ari said. Juels.

It recognizes that MEV is a complicated concept and phenomenon, so there is still a lot of work to be done before the industry reaches a meaningful solution or mitigation.

Tim Beiko agrees with this assessment, suggesting once again that we should probably try to minimize rather than eradicate MEV.

“re are several application-level solutions for managing MEV, but it is a complex problem and each ‘type’ of MEV must be solved essentially independently. I am not an expert on the various approaches, but as I understand it, there is no single ‘silver bullet’ to get rid of FSM, ‘he said.


Discussions about MEV

@angela_walch Do people really agree with the leadership? Above all, I hear them say that it is a problem that must be solved, but no …

– Jake Chervinsky (@jchervinsky)

Bitcoin’s UTXO pattern, high value of the USD coin base, and focus on one asset make MEV an unlikely concern for a while…

– Will Foxley (@wsfoxley)

2 / an interesting conclusion from this is that a chain that eliminates the miner’s discretion (via protected mempool for and…

– Ari Paul ⛓️ (@AriDavidPaul)

Ultimately, MEV is a security metric, not an equity metric

– super dark scrambler (@thegostep)

_____ To find out more: – Ethereum’s MEV vulnerability will be “less of a problem” – Buterin – “Intellectual position” highlights Ethereum’s extractable value vulnerability

– DeFi Sandwich Traders Get ‘Salmonella’ – Ethereum Miners Can Switch To se Coins And Increase ir Values

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