Briefing
This paper addresses the persistent challenge of Maximal Extractable Value (MEV) leaking from the Ethereum protocol to external entities, which creates a principal-agent problem and introduces centralization risks. It proposes “Execution Tickets,” a novel ticketing mechanism designed to internalize MEV directly into the protocol, thereby redefining how value associated with proposing execution payloads is distributed. This theoretical shift facilitates a more equitable distribution of value within the Ethereum ecosystem, paving the way for a more secure and economically robust blockchain network by integrating MEV revenues into the core protocol.
Context
Prior to this research, MEV existed primarily as an external revenue stream for validators, creating a fundamental principal-agent misalignment within Ethereum’s proof-of-stake architecture. This externalization of value fostered timing games, led to inefficiencies in validator compensation, and concentrated power among a limited number of block builders, undermining the network’s decentralized ethos. The prevailing theoretical limitation centered on how to reclaim this protocol-generated value for the benefit of the entire ecosystem, rather than allowing it to be siphoned off by a few specialized actors.
Analysis
The core mechanism, Execution Tickets, introduces a new Ethereum native asset representing the right to propose a future block. The protocol directly brokers this right, effectively selling the opportunity to extract MEV. This system fundamentally differs from previous approaches by internalizing MEV capture, rather than merely mitigating its effects.
The economic model demonstrates that under ideal conditions ∞ homogeneous, risk-neutral buyers with no capital costs ∞ Execution Tickets can capture all MEV, transforming a validator’s external profit into a direct protocol revenue stream. This approach aims to realign incentives and distribute value more broadly among stakers.
Parameters
- Core Concept ∞ Execution Tickets
- Authors ∞ Jonah Burian
- Blockchain Focus ∞ Ethereum
- Problem Addressed ∞ Maximal Extractable Value (MEV) externalization
- Proposed Mechanism ∞ Protocol-brokered block proposal rights
- Economic Model Assumptions ∞ Homogeneous, risk-neutral buyers; zero capital costs
- Key Implication ∞ Internalized MEV revenue for the protocol
Outlook
The introduction of Execution Tickets opens new avenues for enhancing Ethereum’s economic model, potentially leading to fairer and more resilient block production. Future research will focus on refining pricing mechanisms to maximize value capture and exploring the implications for long-term network sustainability and security. This theoretical framework could unlock new categories of decentralized applications by fostering a more predictable and equitable on-chain environment, ultimately strengthening the foundational economic balance of the protocol.
Verdict
This research presents a pivotal theoretical contribution to blockchain economics, proposing a structural change to Ethereum’s value flow that fundamentally reclaims MEV for the protocol and reinforces its long-term integrity.
Signal Acquired from ∞ arxiv.org