Why MEV Redistribution is a More Viable Path Than Elimination

Front-running, sandwich attacks, and arbitrage bots siphon ~$1B+ annually from Ethereum users alone. This is a systemic leak of value that distorts incentives and degrades the user experience.

• Cost: Users pay inflated gas and receive worse prices.
• Trust: The base layer feels adversarial, not cooperative.

Proposer-Builder Separation (PBS) via MEV-Boost formalizes the market. Builders compete to create the most valuable block, and validators auction the right to build it.

• Redistribution: Validator profits (MEV) are shared with stakers via higher yields.
• Efficiency: Specialized builders optimize block space, increasing chain revenue.

Flashbots' SUAVE aims to be a decentralized mempool and block builder for all chains. It separates transaction ordering from execution, creating a competitive marketplace for MEV.

• User Benefit: Express intents privately, potentially receiving a share of captured MEV.
• Chain Benefit: Outsource complex MEV logistics, reducing chain-specific complexity.

Using batch auctions and coincidence of wants (CoWs), this DEX aggregates liquidity and settles orders off-chain, making most MEV strategies impossible.

• Redistribution: Surplus from batch optimization is returned to users.
• Result: Users get better-than-market prices without being front-run.

Sustainable protocols don't fight economic gravity; they harness it. Redistribution turns MEV from a bug into a feature that funds public goods, secures chains, and rewards users.

• Validator Security: Higher yields from MEV strengthen PoS security budgets.
• Protocol Sustainability: MEV can fund development (e.g., Uniswap's fee switch debate).

Any decentralized system with a global state and variable latency will have MEV. Attempts at elimination (e.g., full encryption) simply push it off-chain, creating opaque, ungovernable markets.

• First Principle: Value exists in ordering. Someone will capture it.
• Strategic Choice: Control and redistribute transparently, or cede control to dark pools.

Techniques like threshold encryption (e.g., Shutter Network) or commit-reveal schemes add latency and complexity. This creates a single point of failure for the sequencer or a trusted committee, directly contradicting decentralization goals. The result is a system more fragile than the MEV it seeks to prevent.

Protocols like CowSwap and UniswapX use batch auctions to aggregate user intents. This creates a competitive market where searchers bid for the right to execute, with proceeds flowing back to users. It turns a parasitic extractive process into a public good revenue stream for the protocol and its users.

Fully private mempools (e.g., Flashbots SUAVE) can obscure transaction provenance, enabling sanctions evasion and wash trading. This invites regulatory scrutiny that threatens the entire stack. The cure (total privacy) can be worse than the disease (front-running).

Proposer-Builder Separation (PBS), as implemented by Ethereum post-Merge, formalizes the MEV supply chain. It allows for credibly neutral, on-chain auctions where MEV profits are transparently split between builders, proposers, and through mechanisms like EIP-1559 burn, the network itself.

Bridges and cross-chain apps (e.g., LayerZero, Across) create fragmented liquidity and complex settlement dependencies. This enables cross-domain arbitrage and time-bandit attacks that are nearly impossible to audit or redistribute fairly, siphoning value into opaque off-chain systems.

A shared sequencer layer (e.g., Astria, Espresso) can coordinate execution across rollups, enabling fair cross-rollup MEV capture. Coupled with intent-based architectures, users express goals, not transactions, allowing the network to find optimal execution and redistribute captured value.

Front-running and sandwich attacks are a direct wealth transfer from retail users to sophisticated searchers. This creates a toxic UX and centralizes value extraction.

• Cost: Estimated $1B+ extracted annually from Ethereum users.
• Impact: Deters adoption and erodes trust in on-chain fairness.

Instead of fighting searchers, protocols like CowSwap and UniswapX use batch auctions and solvers to internalize MEV. The resulting surplus is returned to users.

• Mechanism: Solvers compete in off-chain auctions for the right to settle batches.
• Result: Users get better prices; the protocol captures and redistributes the MEV surplus.

Builders should integrate with infrastructure that formalizes redistribution. MEV-Share and Across's intent framework allow users to signal willingness for MEV, creating a rebate market.

• Flow: User expresses intent → Searcher finds optimal route → Part of profit is refunded.
• Benefit: Turns a negative externality into a user acquisition and retention tool.

Protocols that successfully redistribute MEV create a powerful flywheel. Value captured from searchers can be used for buybacks, staking rewards, or direct user rebates.

• Metric: Track MEV captured per transaction and % returned to users.
• Outlook: These protocols are defensible as they align economic incentives directly with user welfare.

Attempts to fully eliminate MEV, like pure FIFO ordering, simply push activity to private channels (e.g., Flashbots' private mempool). This creates a two-tier system favoring whales.

• Outcome: Worse censorship resistance and reduced transparency.
• Principle: Acknowledge and manage the inevitable, don't pretend it doesn't exist.

For builders, the playbook is clear. Integrate with existing redistribution frameworks (SUAVE, MEV-Share) or use intent-based architectures from day one.

• Action: Use ERC-4337 account abstraction to bundle transactions and capture back-run MEV.
• Goal: Make MEV a protocol revenue line item and a user benefit, not a hidden cost.