Debunking MEV Myths
Stay clear of the glorified Miner Extractable Value marketing

Miner Extractable Value?

There are two main ways for miners to make money in blockchains: (i) the block reward and (ii) collected transaction fees.

MEV is a third revenue source, which can be extracted from the application layer (the smart contracts). You can think of MEV as if someone leaves money on a table (after having a juciy drink), and you'll obviously want to get this tip. This is where the MEV monsters come and fight over the money that you left lying around. While those monsters fight, they occupy valuable blockchain and network traffic space, making your transactions more expensive and slower.

What's even worse, these monsters fight over your money. You, an unknowing trader on Uniswap, other exchange, lending or farming platform.

That doesn't seem right, does it?

βš—οΈ MEV Sources

Whenever you interact on the following DeFi platforms, you might leave money on the block:

  • Exchanges (e.g., Uniswap, Sushiswap, Curve etc.)
  • Lending Markets
  • Leverage Platforms
  • and others..

The amounts extracted from MEV accumulate to millions of USD as quantified by researchers.

πŸ”“ MEV and Security

MEV was shown to hurt blockchain security by increasing blockchain forks.

Why are miners not yet forking over MEV? Because they don't know yet how. Just like they didn't know how to extract MEV in the first place.

πŸ•ΈοΈ MEV and Network Overhead

MEV triggers network layer front- and back-running competitions.

πŸ’© The wrong way of Solving MEV

Flashbots?

"Flashbots" run a server to mediate between monsters fighting over MEV opportunities, helping them to steal your money. This server communicates with miners on how to steal the most value from you. Flashbot-enabled miners run MEV geth, a modified geth version provided by flashbots.

What can possibly go wrong?

  • A for-profit company distributes and controls the Ethereum client run by >50% of the miners --- seriously miners?
  • MEV transactions from monsters are visible to the (free) MEV relayer operator --- Don't forget, if you don't pay, you're the product.
  • The MEV relayer run by flashbots has no privacy policy nor terms of conditions --- They may resell/forward your data. #GDPR
  • The MEV relayer centralizes the P2P network --- Didn't we build blockchains to precisely avoid that?
  • The MEV relayer can easily compete with its monsters --- Monsters, don't fool yourself, your transaction bundles are not private.
  • Contrary to claims, an MEV relayer does not remove P2P or block-space overhead --- The rational behavior is often to continue broadcasting bundles.
  • Last but not least, innocent users are stolen from --- Quite the accurate opinion piece πŸ‘Œ.

πŸ”₯ Better ways of Mitigating MEV?

  • Some say that DAGs solve MEV? Why?
  • Some say that encryption (i.e. delayed execution) solves MEV? Why?
  • Some say an MEV relayer can be made more decentralized --- You're not the first to claim "we decentralize later" πŸ˜‚

MEV can be avoided, by design. In a truly decentralized way. Check out SwapSwap as an example.