Why 'MEV-Burn' Is a Red Herring for Fairness

MEV-Burn is redistribution, not elimination. It redirects extracted value from searchers to a protocol's treasury or token holders, creating a new in-protocol rent. This does not address the root cause: the structural advantage of block producers and sophisticated searchers over regular users.

Fairness is a UX problem, not a treasury problem. The user experience of front-running and sandwich attacks remains unchanged. Protocols like UniswapX and CowSwap solve this by moving execution off-chain via intents, directly protecting users instead of monetizing their losses.

The burn creates perverse incentives. It aligns validator/staker revenue with extracting more MEV, not less. This is the opposite of the PBS (Proposer-Builder Separation) goal, which aims to separate block production from profit-maximizing execution.

Evidence: Ethereum's post-merge fee burn (EIP-1559) reduced supply but did not stop MEV. The Flashbots SUAVE initiative focuses on decentralizing block building to mitigate MEV, not burning it, which is the correct architectural priority.

MEV-Burn is redistribution, not remediation. It converts extracted value into a protocol-level burn, boosting the native token's price. This benefits all token holders, but the extraction mechanics remain unchanged. Searchers still front-run your DEX trades on Uniswap, and validators still capture the burned value.

The fairness problem is execution, not distribution. A user's transaction fails or gets a bad price because of its position in the block. Burning fees after the fact does not alter the priority gas auction dynamics that created the unfair outcome. Protocols like Flashbots Protect or CoW Swap solve this by changing execution, not redistributing proceeds.

Evidence: Validator centralization risk increases. Post-merge Ethereum's MEV-Burn via EIP-1559 concentrates rewards at the protocol layer, making block production more lucrative. This incentivizes staking pool consolidation around entities like Lido and Coinbase that can optimize for MEV, counteracting decentralization goals.

MEV-Burn is redistribution, not elimination. The EIP-1559-style burn redirects value to the protocol treasury, but the proposer-builder separation (PBS) model still centralizes extraction power. Builders like Flashbots and bloXroute compete for the most profitable bundles, concentrating influence.

Fairness requires execution, not just economics. Burning MEV fees does not change who captures the value before the burn. The auction mechanism for block space remains opaque, favoring sophisticated actors with private order flow and advanced algorithms.

Post-merge realities cement PBS dominance. With proof-of-stake, validators outsource block construction to specialized builders. This creates a two-tiered market where proposers earn burnt base fees while builders capture the complex, high-value MEV. The fairness problem shifts from miners to builders.

Evidence: Over 90% of Ethereum blocks are built by entities like Flashbots Builder, per mevboost.pics. This demonstrates that value capture centralization persists regardless of the burn mechanism.

MEV-Burn is a tax. It redirects extracted value to validators or a treasury but does not alter the underlying extractive auction mechanics. The core problem—proposers controlling transaction order for profit—remains unchanged, creating the same user harm.

Fairness requires outcome equality. A user paying a 10 ETH priority fee and a searcher paying a 10 ETH bribe generate identical on-chain outcomes but have radically different economic experiences. MEV-burn equalizes the validator's cut, not the user's outcome.

Proposer centralization accelerates. Burning fees into the block reward further incentivizes stake consolidation among the largest validators and professional pools. This creates a feedback loop where the entities controlling order capture more value, increasing systemic risk.

Evidence: Post-EIP-1559, base fee burning did not reduce congestion or high priority fees; it merely changed the fee recipient. Similarly, PBS with MEV-Burn will not stop searchers from frontrunning your Uniswap swap, it will just make the validator richer.

MEV-Burn redistributes, not eliminates. Proponents argue burning extracted value via EIP-1559 mechanics democratizes benefits. This is a political compromise that placates the community with a visible 'tax' on validators while ignoring the underlying market structure that creates the MEV.

Burning rewards centralization. The highest bidder for block space remains the most sophisticated searcher. Burning their payment does not reduce their incentive to outbid others. It entrenches actors with the capital and data to win auctions, as seen in Flashbots' dominance.

Fairness requires protocol redesign. True fairness requires changing the auction mechanism itself, not just the destination of proceeds. Solutions like CowSwap's batch auctions or UniswapX's fill-or-kill intents structurally reduce extractable value by design, making it irrelevant who builds the block.

Evidence: Ethereum's post-merge burn has not reduced MEV. Proposer-Builder Separation (PBS) formalizes the searcher-validator relationship, but the MEV supply chain from searchers to builders to proposers remains intact. The value is extracted before any burn occurs.

MEV-Burn is redistribution, not prevention. It accepts the inevitability of value extraction and merely redirects the proceeds, creating a complex subsidy mechanism that fails to address the underlying market failure.

The root cause is information asymmetry. Searchers with superior transaction visibility and execution speed will always exploit naive users. Protocols like Flashbots SUAVE aim to prevent this by creating a neutral, shared execution environment.

Fair ordering is the prevention paradigm. Solutions like Axiom's ZK proofs for fair ordering or Chainlink's Fair Sequencing Service cryptographically enforce transaction sequence fairness, making front-running and sandwich attacks structurally impossible.

Evidence: Ethereum's post-merge MEV-Burn via EIP-1559 redirects ~0.5% of extracted value to the burn, but PBS (Proposer-Builder Separation) still centralizes block building power in a few entities like Flashbots and bloXroute.