In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington are joined by Flashbots researcher Alex Obadia to discuss the noble yet futile fight to vanquish Miner/Maximal Extrable Value (MEV) on Ethereum.
This episode is sponsored by Unique One Network and Mimo.
MEV is the additional rewards earned by miners as a direct result of their ability to reorder, censor or insert transactions into a block. Since November 2020, Flashbots has created research and built software to assess the impacts of MEV on the network, its users and decentralized applications (dapps).
The research shows, according to Obadia, that MEV cannot be stopped fully.
“At Flashbots we definitely believe that MEV should be mitigated, but we also believe that it can't be fully mitigated down to zero,” said Obadia.
There will always be financial incentives for miners to rearrange transactions within a block due to the auditability and permissionless nature of decentralized blockchains like Ethereum.
In efforts to mitigate the negative impact of MEV on users, Flashbots created a separate channel for transaction and block ordering earlier this year known as Flashbots Auction.
Roughly 85% of Ethereum mining computational power, also called hash power, now uses Flashbots Auction to extract MEV rewards. Obadia described Flashbots Auction as a “communication channel between Ethereum users and miners, where they can express their preference over transaction ordering in a more granular way than simply by upping their gas price.”
While it is difficult to measure the precise impact of the channel on reducing high fees on Ethereum, Edgington asserts that the introduction of Flashbots Auction has been working positively.
“We can see that gas prices are much better than they were two, three months ago. It seems like Flashbots is working in that sense,” said Edgington.
Looking ahead, Obadia and his team are figuring out ways to decentralize Flashbots Auction and create mechanisms within it to distribute MEV rewards in a “democratic” way.
To learn more about Obadia’s work, listen to the full episode of Mapping Out Eth 2.0.
Links:
Ethereum Community Conference Panel Recordings - https://ethcc.interspace.chat/
Flash Boys 2.0 Paper - https://arxiv.org/abs/1904.05234
Flashbots Data Dashboard - https://dashboard.flashbots.net/network
Vitalik Buterin’s Proposal on Fee Market Designs to Mitigate MEV - https://ethresear.ch/t/proposer-block-builder-separation-friendly-fee-market-designs/9725
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