Why MEV Will Always Be Controversial - Ep. 482
Maximal extractable value, or MEV, is a mainstay of the Ethereum landscape. But the process of validators reaping profits from handling new blocks is not without controversy. Ethereum Foundation researcher Justin Drake and bloXroute Labs CEO Uri Klarman assess the current state of MEV. Hear them disagree about the path forward for making Ethereum fairer for all its economic actors.
Show highlights:
what MEV is and how it has evolved over time
the nuances of the newly proposed MEV Blocker and why it’s important for users
whether it’s possible to enable “back-running” while preventing front-running
how to give power back to blockchain users
what the differences and similarities are among several projects trying to solve MEV
how “MEV Burn” will be like the EIP-1559 to what Justin calls contention
whether EigenLayer can help solve MEV problems
whether wallets and DEXs could be doing something different to prevent MEV and generate more revenue
how “exclusive order flow” could be detrimental to DeFi users
what proposer-builder separation (PBS) is and whether it will change MEV distribution
why Uri doesn’t think PBS is the right step forward for Ethereum
Thank you to our sponsors!
Crypto.com
Halborn
Guests:
Justin Drake, researcher at the Ethereum Foundation
Uri Klarman, CEO of bloXroute Labs
Links
Previous coverage of Unchained on MEV:
Why Is Ethereum Trying to Maximize Value From Users? Two Sides Debate
The Chopping Block: Why the Once-Taboo MEV Is Now a Core Part of Ethereum
MEV Blocker
CoinDesk: MEV Blocker Wants to Help You Outrun the Front-Runners
MEV Blocker
Unchained: Ethereum Builders Join Forces to Launch MEV Blocker
MEV Distribution
CoinDesk: Flashbots Proposes New Class of 'Matchmakers' to Share MEV Gains With Ethereum Users
MEV-Share: programmably private orderflow to share MEV with users - The Flashbots Ship
BackRunMe
Wallet-Boost Design Doc · blocknative discourse · Discussion #1 · GitHub
OpenMEV Mechanics and Formulas - Manifold Finance
MEV Smoothing
Committee-driven MEV smoothing - Economics
MEV Burn
Burning MEV through block proposer auctions - Economics
Proposer-Builder separation
Proposer-builder separation | ethereum.org
Vitalik Buterin’s tweet
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Why Is Ethereum Trying to Maximize Value From Users? Two Sides Debate - Ep. 388
Stephane Gosselin, cofounder and chief architect of Flashbots, and Uri Klarman, CEO of bloXrouteLabs, joined Unchained to discuss everything about MEV, an especially important topic now with the Merge coming.
Show highlights:
what MEV is, how it works under Proof of Work
some examples of MEV, like frontrunning and arbitrage
how MEV is a rabbit hole full of monsters
the role of Flashbots in the MEV industry and how Flashbots enabled a reduction of gas fees for users
how MEV-geth functions and how it relates to auctions systems
how bloXroute, Uri’s company, is working with MEV
where Stephane and Uri disagree on MEV, despite agreeing on many fundamental things
how MEV changes with the implementation of Proof of Stake
what MEV-Boost is and the problems it solves
what proposer-builder separation is and the motivation behind this idea
whether DeFi would flourish more if there wasn’t frontrunning and why MEV-Boost doesn’t prevent it
what externalities MEV-Boost or proposer-builder separation (PBS) would solve for users
how MEV exists in other industries and in traditional finance
why Flashbots’ own investors would rather trade on a fair-sequenced rollup than on Flashbots
how the number of MEV extractors has been decreasing and whether this would end up centralizing MEV
whether exploiting certain types of MEV is illegal
how other chains are trying to solve frontrunning, like Osmosis with threshold encryption
what are the levers that can be pulled to solve MEV, according to Uri
how eradicating MEV can positively affect the price of ETH, and by how much
whether validators can potentially share MEV profits with users
how to determine if a network has a good MEV supply chain
Thank you to our sponsors!
Crypto.com: https://crypto.onelink.me/J9Lg/unconfirmedcardearnfeb2021
Ava Labs: https://www.avax.network/
a16z: https://link.chtbl.com/HObAJQDL?sid=unchained
Show Links
Uri: Twitter: https://twitter.com/uriklarman
Stephane: Twitter: https://twitter.com/thegostep
Previous coverage of MEV on Unchained: The Debate Over Ethereum MEV: Should It Be Minimized or Boosted?: https://laurashin.bulletin.com/the-debate-over-ethereum-mev-should-it-be-minimized-or-boosted
The Other Side(s) of Ethereum's MEV Argument: https://laurashin.bulletin.com/the-other-side-s-of-ethereum-s-mev-argument
MEV What is MEV: https://ethereum.org/en/developers/docs/mev/#:~:text=Maximal%20extractable%20value%20(MEV)%20refers,of%20transactions%20in%20a%20block
Proposer-Builder separation: https://www.alchemy.com/overviews/proposer-builder-separation
Uri’s blog post: https://medium.com/@uri_61495/flipping-the-table-on-the-mev-game-dc31df8baaf7
MEV Profit sharing validators: https://www.recvc.com/mev-2-0-the-rise-of-mpsvs/
Panel conversation mentioned in the episode (39:53): https://youtu.be/UKfBFV1TuEM?t=2393
Sealed auction design: https://ethresear.ch/t/mev-sgx-a-sealed-bid-mev-auction-design/9677
Priority Gas Auction (PGA): https://www.mev.wiki/terms-and-concepts/priority-gas-auctions#:~:text=What%20is%20a%20priority%20gas,up%20fees%20for%20other%20users.
Dune’s dashboard - amount of MEV extractors: https://dune.com/queries/1171509
The MEV Game of the Crypto Economy: Osmosis' Threshold Encryption vs. SGX of Flashbot?: https://mirror.xyz/infinet.eth/SFjR1H1-RMnKoIoPjqkxpauVPrLYGqLHQP1dY9FHvx4
Bank of International Settlements report on MEV: https://www.bis.org/publ/bisbull58.pdf
Flashbots Flash Boys 2.0 paper: https://arxiv.org/pdf/1904.05234.pdf
Flashbots Dashboard: https://dashboard.flashbots.net/
Flashbots auctions: https://docs.flashbots.net/flashbots-auction/overview
Flashbots relay open source: https://twitter.com/hasufl/status/1559908331145265156?s=20&t=gtHe5sVetxQXVKfZL2VMYg
MEV Boost: https://www.alchemy.com/overviews/mev-boost
MEV in ETH PoS: https://writings.flashbots.net/writings/mev-boost-call-for-testing
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