Briefing
The core problem of Maximal Extractable Value (MEV) is its current lack of established theoretical foundations, which hinders the development of provably secure mitigation strategies. This research introduces an axiomatic, formal theory of MEV built upon a general, abstract model of blockchains and smart contracts, systematically defining the value extraction capabilities of an adversary with transaction ordering power. The single most important implication is that this new theoretical basis allows for the formal proof of security properties for new blockchain mechanism designs, shifting MEV mitigation from heuristic engineering to rigorous, science-driven protocol construction.
Context
Prior to this work, MEV was primarily understood through empirical observation and engineering solutions like MEV-Boost and Proposer-Builder Separation (PBS). The prevailing theoretical limitation was the absence of a universally accepted, formal model that precisely captured the economic and computational power of an MEV-extracting adversary. This gap led to fragmented, ad-hoc mitigation attempts that lacked provable security bounds, treating MEV as a bug to be patched rather than a systemic property to be formally addressed.
Analysis
The breakthrough is the creation of a universal abstract model that separates the blockchain’s core components ∞ state, transactions, and the adversary’s power ∞ into a formal language. The model defines MEV as the difference in value between the actual block execution and an optimal, counterfactual execution where the adversary’s transaction ordering is excluded. This formalism allows researchers to mathematically define and measure “security against MEV” for any proposed mechanism by checking if the mechanism’s rules limit the adversary’s ability to profit under the defined model constraints. This approach provides an axiomatic, first-principles definition of MEV itself, enabling the field to move beyond analyzing specific attacks.
Parameters
- Axiomatic Formalization ∞ The new theory establishes a minimal set of foundational definitions (axioms) for MEV, moving the field from empirical observation to a provable science.
Outlook
This foundational formalization immediately unlocks new avenues for cryptoeconomic research, primarily by enabling the design of provably secure transaction ordering mechanisms. In the next 3-5 years, this theory will be instrumental in developing in-protocol MEV solutions for decentralized sequencers and shared blockspace markets, moving beyond current external solutions like MEV-Boost. The ultimate application is the creation of blockchain architectures that are provably fair, eliminating the economic incentives for generalized front-running and censorship at the protocol layer.
Verdict
This axiomatic formalization of Maximal Extractable Value provides the essential theoretical foundation required to design and formally verify the next generation of provably fair and economically secure decentralized protocols.
