Briefing
The foundational problem of Maximal Extractable Value (MEV) is its current status as an external revenue stream that incentivizes vertical integration and centralization among block proposers, compromising the integrity of the consensus layer. This research proposes the Execution Ticket mechanism, a novel primitive that fundamentally separates the right to propose a beacon block from the right to propose the execution payload, the source of MEV. The protocol mints and sells these Execution Tickets, which are essentially lottery tickets for the execution right, capturing the MEV value directly and burning the proceeds to create deflationary pressure on the native asset. The most important implication is the creation of a credibly neutral, protocol-enforced market for block space, which transforms MEV from a centralizing force into a direct mechanism for network security and equitable value distribution.
Context
Prior to this work, the primary challenge in decentralized systems was mitigating the centralizing pressure exerted by MEV, where the validator selected to propose a block enjoys a temporary monopoly to extract value through transaction ordering. Established solutions like Proposer-Builder Separation (PBS) and MEV-Burn attempt to outsource or claw back this value, yet they remain susceptible to imperfect value capture and complex, non-protocol-enforced incentive games. The prevailing theoretical limitation was the inability of the base protocol to fully internalize the economic value of block space, leaving a significant portion of the transaction fee and MEV landscape vulnerable to sophisticated, off-chain, and centralizing private networks.
Analysis
The core idea is the introduction of a new cryptographic-economic primitive ∞ the Execution Ticket. This ticket represents a one-time right to propose the execution payload for a specific, future block slot. The mechanism operates by having the protocol continuously mint and sell a fixed quantity of these tickets into an open market. The current Beacon Block Proposer (BP) is still selected via Proof-of-Stake, but their block must now include the execution payload chosen by the random winner of the Execution Ticket lottery.
This lottery is executed on-chain, and the winning ticket is immediately burned, with the sale revenue also burned by the protocol. This fundamentally differs from previous approaches by converting the right to extract MEV into a primary, tradable, and deflationary asset, ensuring the full expected value of block-space extraction is captured at the protocol level rather than being an external reward for a sophisticated validator subset.
Parameters
- Hypothetical Ticket Cost ∞ 0.11 ETH ∞ This figure represents a hypothetical calculation of the opportunity cost for a validator to propose a block today, serving as a baseline for the theoretical market price of a single Execution Ticket.
- Mechanism Objectives ∞ Decentralization, MEV Capture, Block Producer Incentive Compatibility ∞ These are the three primary theoretical objectives the mechanism design is formally evaluated against.
- Value Capture Target ∞ All MEV ∞ Under the ideal theoretical conditions of homogeneous, risk-neutral buyers with no capital costs, the mechanism is proven to extract the full value of Maximal Extractable Value.
Outlook
The immediate next step for this research involves formally modeling and testing the various proposed pricing mechanisms ∞ such as First Price Auction, Second Price Auction, and EIP-1559 style models ∞ using agent-based simulations to optimize for the three core objectives. Strategically, this theory unlocks the potential for truly credibly neutral sequencing at the base layer in 3-5 years, as the protocol itself becomes the primary broker of block space rights. This shift would fundamentally re-architect the relationship between validators and block production, allowing the consensus layer to focus purely on security and finality, while the execution layer is governed by a transparent, protocol-enforced market.
