MEV smoothing refers to mechanisms designed to distribute the benefits of Maximal Extractable Value more equitably among network participants. Maximal Extractable Value (MEV) represents the profit validators or block producers can extract by ordering, censoring, or inserting transactions within a block. MEV smoothing schemes aim to reduce the volatility and concentration of MEV rewards, often by pooling and redistributing them. This approach promotes fairer compensation and mitigates incentives for harmful behaviors like reorgs.
Context
MEV smoothing is a significant topic in blockchain research and news, particularly within the Ethereum ecosystem following its transition to Proof of Stake. Proposals like proposer-builder separation and various pooling solutions are discussed as ways to address the centralization risks and unfairness associated with MEV extraction. Its development seeks to enhance network health and decentralization.
Introducing the Smooth-Running Auction, a mechanism using Time-Averaged Commitments to decouple block value from proposer revenue, stabilizing MEV and promoting decentralization.
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