Validator Extractable Value (Cross-Chain)

A validator or super-majority of a bridge's consensus set manipulates the state attestation process to extract value. This can involve:

• Withholding signatures to delay or censor transactions, forcing users to pay higher fees.
• Finalizing invalid state roots to mint illegitimate assets on the destination chain, which are then swapped for legitimate assets before the fraud is detected.
• Time-bandit attacks where validators collude to reorg the bridge's attestation chain to steal funds from a specific transaction.

Attacks targeting the oracle networks that supply price data for cross-chain swaps and lending protocols. Validators or node operators in the oracle network can:

• Submit corrupted price data to create arbitrage opportunities between chains.
• Front-run large cross-chain swaps by seeing the pending oracle update and taking positions on the destination chain.
• Exploit the delay between price updates on different chains to perform risk-free triangular arbitrage.

Extracting value from the relayer selection mechanisms used by many cross-chain messaging protocols (e.g., Axelar, Wormhole).

• Relayer bidding wars: Relayers, who are often also validators, can engage in Priority Gas Auctions (PGAs) on the destination chain to win the right to submit a cross-chain message, embedding their own profitable transactions within the same bundle.
• Censorship for extraction: A relayer can temporarily censor a profitable cross-chain arbitrage transaction, execute the arbitrage themselves, then relay the original transaction.

Targeting the liquidity pools that facilitate cross-chain asset transfers, such as those in LayerZero OFT or Circle's CCTP.

• Validator front-running: Validators observing pending mint transactions on the destination chain can front-run them by purchasing the asset before mint, then selling into the new liquidity.
• Liquidity asymmetry exploitation: Manipulating attestations to create temporary, exploitable imbalances between liquidity pools on the source and destination chains, allowing for atomic arbitrage.

Extending traditional sandwich attacks across multiple blockchains. A validator or coordinated group performs a multi-step attack:

1. Observe a large cross-chain swap intent on Chain A.
2. Front-run it on Chain A, driving the price up.
3. Ensure their front-run transaction is included in the state attestation relayed to Chain B.
4. Back-run the victim's swap on Chain B after it executes at a worse price. This requires control over the sequencing on the source chain and the attestation to the destination chain.

Exploiting the governance mechanisms of cross-chain protocols that use bridged governance tokens. A malicious validator or cartel can:

• Hold governance votes hostage by threatening to censor or delay the cross-chain messages containing vote casts unless a ransom is paid.
• Manipulate treasury withdrawals by interfering with the cross-chain execution of governance-approved multi-sig transactions.
• Extract value by biasing proposal outcomes through selective censorship of votes, influencing protocol upgrades or grants in their favor.

VEV arises from the atomic composability of assets and actions across interconnected blockchains. Validators or relay operators who control multiple chains can exploit cross-chain arbitrage opportunities, liquidity fragmentation, and oracle price updates by strategically ordering transactions to capture value that spans ecosystems. This creates a systemic risk where a single entity's influence extends beyond a single ledger.

Common VEV strategies include:

• Cross-DEX Arbitrage: Front-running a large swap on Chain A that will move prices on a connected DEX on Chain B.
• Bridge Manipulation: Controlling transaction order to exploit delays in cross-chain messaging and asset bridging finality.
• Oracle Griefing: Influencing the timing of oracle price updates on one chain to trigger or liquidate positions on another.
• Sequencer Censorship: A shared sequencer for multiple rollups censoring transactions to benefit its own cross-chain positions.

Certain interoperability designs inherently increase VEV potential. Light client bridges with long challenge periods, optimistic rollups sharing a sequencer, and shared security models (e.g., restaking) can consolidate trust assumptions, creating centralized points of failure that validators can exploit for cross-chain value extraction.

The ecosystem is developing countermeasures, though solutions are nascent. Key approaches include:

• Threshold Cryptography: Using distributed key generation for bridge operations.
• Force Inclusion Protocols: Guaranteeing transaction processing deadlines.
• Cross-Chain MEV Auctions: Transparently auctioning the right to order cross-chain bundles.
• Enhanced Monitoring: Systems like Chainscore track validator behavior and cross-chain flow to detect predatory patterns.

VEV transforms the security model of interconnected blockchains. It can lead to validator centralization, as operators seek to control multiple chains to maximize extractable value. This centralization pressure can undermine the crypto-economic security of individual chains and create new systemic risks where an attack on one chain is leveraged to profit on another.

VEV is not theoretical. Instances have been observed in ecosystems like Cosmos IBC, where a validator controlling multiple consumer chains could reorder IBC packets, and in Ethereum/Polygon arbitrage where bridge finality delays are exploited. The growth of restaking and shared sequencers is expected to make VEV a primary concern for modular blockchain architectures.

Cross-Chain MEV is the profit validators can extract by strategically ordering, including, or censoring transactions that span multiple blockchains. This includes arbitrage between decentralized exchanges (DEXs) on different chains, liquidations in cross-chain lending protocols, and frontrunning cross-chain asset transfers. It is a primary source of xVEV, as the ability to control the outcome of these multi-chain transactions is monetizable.

A core xVEV vector involves manipulating the oracles and relayers that facilitate cross-chain communication. A malicious validator could:

• Censor or delay specific bridge attestation messages to create arbitrage opportunities.
• Frontrun a user's deposit on a source chain before the corresponding minting event on the destination chain.
• Withhold proofs to cause failed transactions, then profit from the resulting market dislocation.

xVEV enables powerful consensus-level attacks that threaten the security of connected chains. A validator with significant stake on a lighter, cheaper-to-attack chain (Chain B) could manipulate its state to create false proofs, which are then used to fraudulently mint assets or trigger actions on a more valuable chain (Chain A). This turns the economic security of one chain into a vulnerability for another.

The pursuit of xVEV can lead to re-centralization. Entities that operate validators across multiple chains (e.g., professional staking pools) gain a significant advantage in capturing cross-chain arbitrage. This creates a feedback loop where the most profitable validators accumulate more stake, further consolidating control over transaction ordering across ecosystems and undermining decentralization.

Protocols are developing defenses against xVEV exploitation:

• Threshold Cryptography: Using distributed validator technology (DVT) or multi-party computation (MPC) for relayers to prevent single-validator manipulation.
• Optimistic Verification: Introducing challenge periods for cross-chain messages, allowing fraud proofs to be submitted.
• Fair Ordering Protocols: Implementing consensus-level rules (e.g., based on transaction timestamps) to reduce the validator's discretionary power over cross-chain transaction ordering.

• Maximal Extractable Value (MEV): The foundational concept for profit from block production on a single chain.
• Proposer-Builder Separation (PBS): A design pattern that separates block building from proposing, often extended to cross-chain contexts.
• Time-Bandit Attacks: A related attack where a validator reorganizes a chain's history to capture past MEV, which becomes more complex and profitable in a cross-chain setting.