DAG Consensus Achieves Blind Order-Fairness Mitigating MEV → Research

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Briefing

The core problem of Maximal Extractable Value (MEV) extraction, which destabilizes consensus and exploits users through transaction reordering, is addressed by introducing the Blind Order-Fairness property. This new property is realized through a framework that integrates a commit-and-reveal scheme directly into a Directed Acyclic Graph (DAG) based Byzantine Fault Tolerance (BFT) consensus protocol. This foundational breakthrough ensures that no consensus participant can learn the content of a transaction until the entire network has cryptographically committed to its final, unchangeable position in the total ordering, thereby eliminating the informational advantage required for profitable MEV extraction.

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Context

Traditional leader-based blockchain consensus protocols, even those with high Byzantine Fault Tolerance guarantees, grant the block proposer unilateral discretion over transaction ordering. This established architecture creates the vulnerability for MEV, where a malicious leader can front-run or sandwich user transactions because they observe the transaction contents before committing to the block order. The prevailing limitation is the lack of a formal mechanism to enforce temporal fairness and content privacy simultaneously at the consensus layer, leading to systemic instability and user exploitation.

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Analysis

The proposed mechanism fundamentally alters the transaction lifecycle by introducing a two-phase process. Users first submit encrypted transactions, which act as a cryptographic commitment to their intent. The DAG-BFT consensus then operates exclusively on these opaque commitments, establishing a final, total order for the encrypted transactions without revealing their contents.

Only after this order is finalized does a decentralized secret-management committee or threshold cryptography scheme reveal the decryption key, allowing the network to reveal and execute the transactions in the predetermined, fair sequence. This two-phase commit-reveal process ensures the consensus layer is blind to the value it is ordering, enforcing fairness by design.

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Parameters

BFT Threshold → N ≥ 3F + 1 → The minimum number of total validators (N) required for security, based on the number of Byzantine faulty validators (F), which is the standard BFT requirement maintained by the framework.

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Outlook

This research opens a critical new avenue for decentralized exchange and lending protocols, allowing them to operate with a strong cryptographic guarantee against malicious transaction sequencing, which could unlock a new category of “MEV-neutral” DeFi applications. The next logical step involves formalizing the integration of this Blind Order-Fairness primitive into existing, high-throughput BFT protocols and developing efficient threshold cryptography schemes that minimize the latency overhead introduced by the commit-and-reveal phases, moving toward a truly fair and performant transaction environment.

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Verdict

The formalization of Blind Order-Fairness through a commit-and-reveal BFT primitive fundamentally redefines the security model for transaction ordering, establishing a cryptographic foundation for equitable decentralized systems.

Blind Order-Fairness, Commit-and-Reveal Scheme, DAG Consensus, Byzantine Fault Tolerance, Transaction Sequencing, MEV Mitigation, Decentralized Finance, Cryptographic Primitives, Consensus Security, Front-Running Prevention, Order-Fairness, Consensus Protocol, Asynchronous BFT, Distributed Systems, Transaction Encryption, Validator Incentives Signal Acquired from → arxiv.org