Why MEV Cannot Be Solved, Only Managed

The mempool is public. Bots scan for profitable transactions (arbitrage, liquidations) and pay higher fees to front-run yours. This results in worse prices and failed transactions for end-users.

• Cost: Extracts ~$1B+ annually from users.
• Impact: Creates a hostile, unpredictable user experience.

Separate transaction ordering from block building to manage, not hide, MEV.

• Proposer-Builder Separation (PBS): Ethereum's path. Builders (Flashbots, bloXroute) compete to create the most profitable block, sharing rewards with validators.
• Encrypted Mempools (e.g., Shutter Network): Hide transaction content until inclusion, neutralizing front-running.

Shift from specifying transactions (how) to declaring outcomes (what). Users submit signed intents; off-chain solvers (CowSwap, UniswapX, Across) compete to fulfill them optimally.

• Benefit: Users get guaranteed best execution, solvers capture the MEV.
• Trade-off: Introduces solver trust assumptions and off-chain complexity.

Bake MEV redistribution into the protocol logic itself. Turn a threat into a sustainable revenue stream.

• Examples: Cosmos' fee burn, Osmosis' threshold encryption, EigenLayer's shared sequencing.
• Result: MEV is captured and redistributed to stakers or the treasury, aligning incentives.

MEV management solutions often centralize power. PBS creates professional builder cartels. Encrypted mempools rely on trusted key holders. This is the core tension.

• Risk: Top 3 builders control >60% of Ethereum blocks.
• Mitigation: Dual-token PBS models, distributed key generation (DKG).

Architects must design for MEV from day one. Your protocol's economic security depends on it.

• Audit for: Sandwichability, liquidation cascades, oracle manipulation.
• Integrate: SUAVE, MEV-Share, or intent solvers as primitive layers.
• Assume: Any extractable value will be extracted.

Public mempools are a free-for-all where searchers and builders compete in zero-sum games, extracting ~$1B+ annually from users via frontrunning and sandwich attacks. This creates network congestion and unpredictable execution.

• Cost: Users pay inflated gas and suffer price slippage.
• Inefficiency: Valuable block space is wasted on arbitrage, not user transactions.

Protocols like Flashbots Protect, BloXroute, and Eden Network privatize transactions, removing them from public view. This shifts the game from a chaotic race to a managed auction.

• User Benefit: Eliminates frontrunning, guarantees execution.
• Builder Benefit: Creates a competitive, efficient market for block space.

Even with private mempools, a handful of sophisticated builders (e.g., Titan, Relayoor) can dominate block production, creating a new point of centralization and potential censorship.

• Risk: Single points of failure and regulatory capture.
• Outcome: MEV value accrues to a few entities, not the network.

Initiatives like Flashbots' SUAVE aim to decentralize the builder role itself. It creates a separate mempool and blockchain for preference expression, making block building a permissionless, competitive market.

• Innovation: Separates transaction ordering from execution.
• Goal: Democratizes access to MEV extraction opportunities.

MEV is a tax on users. If all captured value flows to searchers and validators, the protocol and its users see no benefit from this inherent economic activity.

• Inequity: Users bear the cost but get none of the reward.
• Misalignment: Validator incentives skew towards maximal extraction.

Proposer-Builder Separation (PBS) architectures, combined with mechanisms like MEV smoothing (pioneered by Osmosis) or MEV burn (like EIP-1559), capture and redistribute value.

• Mechanism: Auction proceeds are shared with the protocol treasury or burned.
• Result: Aligns validator incentives with long-term network health.

Validators can be bribed to censor or reorder transactions, threatening chain liveness and finality. This is a core protocol-level vulnerability, not just a DEX arbitrage issue.

• Time-Bandit Attacks: Reorgs to steal finalized blocks for $100M+ opportunities.
• Censorship: Block proposers can exclude transactions for a fee, a direct attack on neutrality.

Decouples block building from proposing. Specialized builders (e.g., Flashbots SUAVE, bloXroute) compete to create the most profitable, MEV-optimized blocks, selling them to honest proposers.

• Neutrality: Proposer selects the highest-paying header, blind to contents.
• Efficiency: Creates a competitive market, capturing ~99% of extractable value for the chain.

Without protection, users are front-run and sandwiched on every swap, losing 5-50+ bps per trade. This is the most visible, corrosive form of MEV.

• Sandwich Attacks: Bots exploit predictable DEX trades, costing users >$1B annually.
• Liquidity Fragmentation: MEV risk deters LP participation, increasing slippage for everyone.

Users submit what they want, not how to do it. Solvers (e.g., UniswapX, CowSwap, 1inch Fusion) compete privately to fulfill the intent optimally.

• No Frontrunning: Transactions are revealed only upon execution.
• Better Prices: Solvers bundle and route across Uniswap, Curve, Balancer for best execution.

MEV scales with interoperability. Arbitrage between Ethereum, Arbitrum, Optimism creates new attack vectors. Oracle updates (e.g., Chainlink) are prime targets for multi-million dollar exploits.

• Cross-Domain MEV: Faster finality chains can front-run slower ones.
• Oracle Latency: ~500ms update delays are exploited for DeFi liquidation cascades.

Transactions are encrypted until a quorum of validators commits to inclusion. Projects like Shutter Network and EigenLayer's MEV Blocker implement this.

• Fair Ordering: Prevents targeted frontrunning based on tx content.
• Cross-Chain Safe: Can be integrated with bridges like LayerZero and Across to protect interchain messages.