MEV is destroying the fairness of Ethereum? Introduction of 25 anti-MEV projects
“Imagine when ETH becomes a universal currency. You try to buy Dua Lipa’s comeback tour NFT tickets for $50 on an auction platform. A robot sees your transaction and preemptively buys it at the same price. But don’t worry, they have sold it back to you at your highest bid of $100 in the same block.”
This is a scene proposed by pmcgoohan, the earliest proponent of the Ethereum MEV problem, when he was conceiving the future. Although this extreme situation may not necessarily happen, in the current relatively simple process of asset exchange on the Ethereum chain, MEV is already having a secret and covering influence.
Flashbots data shows that since January 1, 2020, the value captured by MEV has been close to 730 million US dollars, and there is a growing trend.
Cumulative extraction of MEV, source: Explore.flashbots.net
The current mainstream agreements, including Uniswap, SushiSwap, Balancer, dYdX, Curve, etc., are all affected by MEV. Many mining pools including Ethermine, FlexPool, Spark Pool, F2Pool, and Hiveon participated in MEV. MEV has attracted more and more attention.
01, the status quo of MEV ecology
MEV stands for Miner Extractable Value. Obtainers of bookkeeping rights and block transaction writers represented by miners have the right to filter and sort transactions on the chain. Participants in the ecosystem, such as arbitrage robots, attackers, and even miners themselves, use this right to obtain additional income.
On the whole, MEV benefits one party in the ecology, and causes the other party or the public to suffer losses. Although MEV is a behind-the-scenes operation, and the reordering of transactions by miners is inherently secretive, the MEV phenomenon has become very common in the Ethereum ecosystem. Taking data from the Ethereum mining pool 2Miners.com as an example, Beep News counted 50 blocks mined by the mining pool at the time of writing, 13 of which involved MEV transactions.
2Miner.com block output and MEV situation, source: 2Miners.com
Flashbots information shows that in the past 24 hours, the value captured through MEV transactions reached $500,000. Ethereum’s daily gas fee of more than 20 million US dollars, an average of 2% is used for MEV transactions.
One type of MEV transaction is based on the MEV-Geth provided by Flashbots. The characteristic of this type of transaction is that the gas price of the two previous and after transactions is 0. Dune Analytics data shows that there are thousands of transactions on Ethereum with a gas price of 0 per day. At the highest time, the number of transactions with a gas price of 0 exceeded 14,000, which means that there are about 7,000 such MEV transactions generated in a day, and this is only a part of all MEV transactions.
0 gas price transaction, source: Dune Analytics
In addition, the profit-seeking nature of miners and mining pools in MEV has also caused a lot of concerns. Because they can directly determine the order of transactions in their packaged blocks, miners and mining pools are considered to be the most likely participants to launch attacks such as preemptive transactions and sandwich strikes. In addition, because the attack opportunity is time-sensitive, it may be fleeting, and the relationship between miners, mining pools, and attackers may also appear as a collusive relationship.
At present, the mining pools participating in MEV transactions have been very extensive, which may involve collusion with malicious participants in the ecology, or transactions conducted using anti-MEV solutions on the market.
According to data captured by the Ethereum mining pool FlexPool at the end of May this year, at least 20 mining pools obtain MEV revenue through Flashbots, including Bee Pool, Hiveon Pool, Spark Pool, F2Pool, Ethermine, etc. These mining pools capture an average of 0.1-0.2 ETH for each block through MEV, which accounts for about 3.3-6.6% of the block reward. With the implementation of EIP-1559, the motivation of miners and pools to obtain additional value through MEV may become stronger.
Ethereum mining pool mining output, source: flexpool
02, MEV track project
There is a lot of enthusiasm for the discussion of MEV in the market. Whether it is a hawk who optimistically believes that the MEV problem can be solved, or a dove who pessimistically believes that MEV can only be mitigated or exploited, there are many Angle puts forward an anti-MEV program.
The reason why MEV occurs is mainly because the transaction information on the chain is disclosed, so that attackers can use it to capture value first by jumping in the queue. Therefore, the anti-MEV solutions on the market are mainly designed through the following ideas:
1) Hide the transaction;
2) Bundle transactions together, or limit the order of transactions to prevent jumping in line;
3) Provide MEV services to arbitrageurs and liquidators with MEV withdrawal requirements, and to users with transaction protection needs. These users need to spend additional costs or engage in game competition with each other;
4) Actively discover MEV opportunities in the market, and form collaborative cooperation among ecological participants.
Huobi Ventures has classified the anti-MEV solutions on the market, and Beep News supplements and organizes on this basis.
Hawks who believe that MEV needs to be eliminated from the source have mainly proposed the following types of solutions:
1) Operation in the chain
Chainlink: Provide fair sorting services.
LibSubmarine: Privacy protection for transaction information.
Veedo: Use the time lock to delay the transaction information for a period of time, and then make it public, so that arbitrage/clearing/attackers cannot obtain arbitrage space in time.
2) Off-chain operation
Automata: Generate a unique signature for the transaction queue. Miners cannot insert new transactions into the transaction queue, otherwise the signature will change.
Arbitrum: Aggregate and package transactions so that transactions cannot be modified in Layer 1.
Vega Protocol: Establish a new blockchain. At the level of the chain itself, within a unit of time, the transactions that are first broadcast and most known by nodes are given priority to execute.
Sikka: Encrypt transaction information and its own message pool, and the transaction is packaged and verified by 2/3 nodes and made public.
Shutter Network: Encrypt before the transaction is sent, and after confirming that it is packaged into the block through the miner message pool, the transaction information is decrypted.
Secret Network: Smart contract interacts with encrypted input, output, and state. No one, including the node, can see any private data. The transaction pool data is also encrypted.
4) New trading model
CowSwap: If the needs of both parties of the transaction match, the transaction can be reached directly, without the need for market makers or liquidity providers to match the transaction.
Gnosis V2: Through batch auctions, it integrates various decentralized exchanges as a source of liquidity to provide traders with the best price and reduce slippage as much as possible to resist MEV.
The doves who believe that MEV cannot be avoided and can be extracted to alleviate this problem mainly have the following types of solutions:
1) Private transactions
Stealth Transactions: Proposed by 1inch to make transactions bypass the public mempool and queue them in the private mempool for packaging.
Request for Quotation (RFQ) DEX: such as 0x, 1inch limit order, Tokenlon, Hashflow, they are designed to be MEV-free from the beginning. In the RFQ model, users receive orders specially made for their addresses, and transaction execution smart contracts prevent other users who see their transactions from filling out orders.
Tai Chi Network: Founded by Xinghuo Pool, users can directly send transactions to the privacy pool of Xinghuo Pool through the interface provided by Tai Chi Network.
BloXroute: Provides privacy communication functions, allowing transactions to reach miners directly without being exposed.
2） MEV Auction （MEVA）
It was proposed by Optimism to split the two major rights of miners-transaction selection and transaction sorting. Miners retain the transaction selection right, and the transaction sorting right is handed over to Sequencer. Miners select the only Sequencer through auction. This scheme still has Sequencer collusion to commit evil, Sequencer can also become a miner and other problems.
3）Front-running as a Service （FRaaS）
Flashbots: MEV searchers in the ecology, including arbitrageurs, liquidators, users with anti-MEV needs (such as DApps, etc.) send transactions in the form of Bundles to miners through Relays, and pay Fees to achieve MEV capture, or to prevent your own transactions from MEV attacks. It can be said that it is currently the most widely used anti-MEV solution.
ArcherDAO: Archer Relay is compatible with Flashbots’ MEV-Geth client; there are robots in Archer Swap that perform MEV search, extraction, and bundling of transactions in it, and send them to miners through Archer Relay+Flashbots to grab MEV.
mistX: Proposed by the Alchemist team to bundle user transactions into Flashbots.
KeeperDAO: The liquidity provider provides loan funds for Keeper. Keeper borrows funds from the pool through flash loans, and arbitrages among DEXs, participates in the liquidation of the lending platform to capture MEV, and returns profits to KeeperDAO after success. KeeperDAO rewards liquidity providers, Keeper and participating users with ROOK tokens.
RunBackMe: Designed by bloXroute, it allows users to submit private transactions to avoid MEV attacks. It also makes profits by rolling back user transactions, and part of the profits is returned to users.
MiningDAO: Allow any Ethereum user to submit the entire block to the miner. Each block is accompanied by a certain reward. If it is successfully packaged on the chain, the reward will be paid to the miner.
YCabal: proposed by Manifold Finance, serving platforms such as Yearn Finance and SushiSwap. YCabal is an aggregator of MEV services, using Flashbots, KeeperDAO, ArcherDAO, etc. for transaction settlement. If there is a MEV opportunity for the transaction submitted by the user, the user will get a partial refund.
Eden: Contains four layers of anti-MEV structure, which are slot tenants (transactions are executed first), transaction bundles (bundling transactions to Flashbots for execution), pledge EDEN transactions (users who pledge at least 100 EDEN can get faster transactions Speed), public pool (transactions are sorted by gas fee).
B.Protocol: Integrate with DeFi lending platforms such as MakerDAO. Liquidators participate in liquidation on these platforms to capture MEV value. Part of the proceeds will be used to reward liquidity providers in B.Protocol. At the same time, the liquidation of lending platforms such as MakerDAO will also be more stable.
“Building Guardrails for the Ethereum Dark Forest, Panoramic Interpretation of Eight Anti-MEV Solutions” by Huobi Ventures
“Why is the MEV problem of Ethereum more serious than you think?” 》By Pmcgoohan
“Viewpoint|The Arrival of the Original Disordered MEV Era” by Kai
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/mev-is-destroying-the-fairness-of-ethereum-introduction-of-25-anti-mev-projects/
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