Ethereum researcher Justin Drake has proposed a radical idea to burn the maximal extractable value (MEV) from the network. MEV is the value that validators can extract from users by manipulating transactions in blocks. Drake believes that burning MEV could reduce the incentives for such manipulation and improve the security and fairness of Ethereum.
What is MEV and why is it a problem?
MEV stands for maximal extractable value, and it refers to the maximum amount of value that validators can extract from users by reordering, inserting, or censoring transactions in blocks. MEV arises from the fact that transactions on Ethereum are public and can be exploited by validators who have the power to decide which transactions to include and in what order.
MEV can have negative consequences for both users and the network. For users, MEV can result in higher fees, lower returns, front-running, sandwich attacks, and other forms of transaction manipulation. For the network, MEV can create instability, centralization, and security risks. For example, MEV can incentivize validators to collude, censor, or fork the chain to capture more value.
How can MEV be burned?
Drake’s proposal is to burn the MEV by redirecting it to a special contract that would destroy the ether (ETH) received. This would effectively reduce the supply of ETH and increase its scarcity and value. Drake argues that this would benefit all ETH holders and create a positive feedback loop for Ethereum’s security and adoption.
To implement this idea, Drake suggests using a technique called Flashbots, which is a project that aims to democratize and transparentize MEV extraction. Flashbots allows validators and searchers (who find MEV opportunities) to communicate and collaborate through a private channel called MEV-Relay. This way, validators can include profitable transactions in blocks without broadcasting them to the public mempool, where they could be frontrun by others.
Drake proposes that instead of paying validators directly, searchers would send their transactions to the burn contract, which would then pay validators a portion of the burned fees. This would ensure that validators still have an incentive to include MEV transactions, while also preventing them from manipulating them further.
What are the potential benefits of burning MEV?
Burning MEV could have several advantages for Ethereum and its users. Some of them are:
– Reducing transaction manipulation: By burning MEV, validators would have less incentive to reorder, insert, or censor transactions in blocks, as they would only receive a fraction of the value extracted. This could improve the fairness and efficiency of the network and protect users from harmful MEV attacks.
– Enhancing security: By burning MEV, the network would effectively increase the cost of attacking Ethereum, as attackers would have to burn more value than they could extract. This could make Ethereum more resilient to 51% attacks, selfish mining, and chain reorganizations.
– Increasing value accrual: By burning MEV, the network would reduce the supply of ETH and increase its scarcity and value. This could benefit all ETH holders and stakers, as well as attract more users and developers to Ethereum. Additionally, burning MEV could create a positive feedback loop for Ethereum’s security and adoption, as more value would be secured by staking and more users would be incentivized to join the network.
MEV is a complex and controversial topic in Ethereum, as it poses significant challenges for both users and the network. Ethereum researcher Justin Drake has proposed a radical idea to burn the MEV from the network, which could potentially reduce the incentives for transaction manipulation and improve the security and value of Ethereum. However, this idea also faces technical and social hurdles, such as implementing Flashbots at scale and convincing validators and searchers to participate. Therefore, more research and experimentation are needed to evaluate the feasibility and impact of burning MEV on Ethereum.