What is the Context of Value Extraction?

Discussions about value extraction are pertinent when examining the tokenomics of new projects, the fee structures of decentralized exchanges, or the economic incentives governing blockchain protocols. Reports on this topic often analyze whether the distribution of value is equitable and sustainable for the long-term health and growth of the ecosystem.

Value Extraction

Definition

Value extraction describes processes or mechanisms within a system designed to capture and transfer economic worth from one party to another. In decentralized systems, this can occur through transaction fees, protocol incentives, or sometimes through mechanisms that disproportionately benefit certain participants over others. It relates to how economic utility is distributed or appropriated.

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∞User Strategy

∞Liquidity Provision

∞Potential Function

Application-Layer Mechanism Design Secures Arbitrage-Resilient Decentralized Finance

By shifting MEV mitigation to the AMM's core logic, this mechanism guarantees risk-free profit elimination and truthful user behavior under fair sequencing.

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∞Transaction Ordering

∞Network Resilience

∞Formal Theory

Formalizing MEV with an Abstract Model for Provable Blockchain Security

This paper establishes a rigorous, abstract model for Maximal Extractable Value, enabling foundational security proofs against economic manipulation in blockchains.

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∞Economic Security

∞Automated Markets

∞Time Advantage

Auctioning Time Advantage Optimizes MEV Capture on Automated Market Makers

This research introduces an auction mechanism for transaction time advantage, fundamentally reshaping MEV extraction strategies and enabling AMMs to reclaim value.

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∞Value Extraction

∞Protocol Exploitation

∞Smart-Contracts

Formalizing MEV with Abstract Blockchain Models for Robust Security Analysis

A formal MEV theory, built on abstract blockchain models, enables rigorous security proofs, fortifying decentralized systems against economic exploitation.

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∞Economic Attacks

∞Transaction Ordering

∞Protocol Design

Formalizing Universal Maximal Extractable Value for Blockchain Security

This research establishes a rigorous, universal definition of Maximal Extractable Value, quantifying maximum adversarial gain to fortify blockchain security.