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Research

Batch Processing Eliminates MEV in Automated Market Makers

A novel AMM mechanism processes transactions in batches, preventing miners from extracting value through predatory ordering and ensuring fair user interaction.
September 19, 20253 min

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Briefing

The core research problem addressed is the pervasive issue of Maximal Extractable Value (MEV) within Automated Market Makers (AMMs), where block producers exploit transaction ordering to gain risk-free profits at the expense of users. This paper proposes a foundational breakthrough ∞ a new AMM mechanism that processes all transactions within a block in a batch, fundamentally eliminating MEV opportunities. This mechanism ensures arbitrage resilience for miners in legacy blockchains and achieves incentive compatibility for users in sequencing-fair decentralized block proposals, signifying a crucial step towards more equitable and secure decentralized finance architectures.

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Context

Prior to this research, Automated Market Makers, while popular for facilitating crypto-asset exchanges on blockchains, faced a significant and unresolved foundational problem ∞ Miner Extractable Value (MEV). This prevailing theoretical limitation allowed block producers (miners or validators) to front-run, back-run, or reorder user transactions to capture arbitrage profits, leading to systemic value extraction, detrimental effects on user experience, and a centralization risk within the blockchain ecosystem. The challenge was to design AMM mechanisms that could operate efficiently without creating these exploitable ordering opportunities.

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Analysis

The paper’s core mechanism introduces a batch processing approach for all transactions within an Automated Market Maker block. Conceptually, instead of transactions being ordered and executed individually, which allows for front-running and other MEV strategies, the new primitive treats all transactions submitted within a block as a single, atomic unit for pricing and execution. This fundamentally differs from previous approaches by removing the granular ordering control that enables MEV.

For traditional blockchains with a single block proposer, this batching ensures arbitrage resilience, meaning the miner cannot profit from transaction reordering. For more advanced, sequencing-fair blockchains, the mechanism achieves incentive compatibility, aligning user behavior with honest participation.

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Parameters

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Outlook

This research opens new avenues for designing robust and fair decentralized finance protocols by providing a concrete mechanism to mitigate MEV. The next steps in this research area will likely involve exploring the practical implementation challenges of batch processing across various blockchain architectures and assessing its impact on transaction latency and throughput. Potential real-world applications within 3-5 years include the deployment of MEV-resistant AMMs that offer a more predictable and equitable trading experience for users, fostering greater trust and adoption in DeFi. It also encourages further academic inquiry into mechanism design principles that inherently disincentivize predatory block production strategies.

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Verdict

This research delivers a decisive theoretical framework and a practical mechanism to fundamentally resolve Maximal Extractable Value in Automated Market Makers, significantly advancing blockchain economic security.

Signal Acquired from ∞ arXiv.org

Glossary

achieves incentive compatibility

This research introduces a novel reward mechanism to prevent Sybil-like mirroring attacks in decentralized oracles, ensuring data integrity and fair compensation.

extractable value

This research establishes a universal, game-theoretic definition for Maximal Extractable Value, fundamentally reframing economic attacks within public blockchains for systematic mitigation.

transactions within

Attackers compromise widely used JavaScript packages, replacing legitimate crypto transaction destinations with malicious addresses, posing an immediate threat to asset integrity.

ensures arbitrage resilience

This research reveals that arbitrageurs on fast-finality blockchains maximize profit by splitting MEV opportunities into small, spam-based transactions, exposing critical flaws in current fee mechanisms.

transaction

Definition ∞ A transaction is a record of the movement of digital assets or the execution of a smart contract on a blockchain.

mechanism

Definition ∞ A mechanism refers to a system of interconnected parts or processes that work together to achieve a specific outcome.

maximal extractable value

This research establishes a universal, game-theoretic definition for Maximal Extractable Value, fundamentally reframing economic attacks within public blockchains for systematic mitigation.

incentive compatibility

Definition ∞ Incentive Compatibility describes a system design where participants are motivated to act truthfully and in accordance with the system's rules, even if they could potentially gain by misbehaving.

decentralized finance

Definition ∞ Decentralized finance, often abbreviated as DeFi, is a system of financial services built on blockchain technology that operates without central intermediaries.

maximal extractable

This research establishes a universal, game-theoretic definition for Maximal Extractable Value, fundamentally reframing economic attacks within public blockchains for systematic mitigation.

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