Briefing
The persistent challenge of Maximal Extractable Value (MEV) attacks, which exploit transaction ordering on public blockchains, has lacked a rigorous theoretical framework to enable systematic mitigation. This paper introduces a foundational, abstract model of blockchains and smart contracts to establish a formal theory of MEV, fundamentally reframing these economic attacks. This breakthrough provides the essential basis for developing provably secure protocols and smart contracts, fostering a more robust and equitable decentralized financial ecosystem by enabling explicit security guarantees against MEV.
Context
Prior to this research, Maximal Extractable Value (MEV) was predominantly understood through empirical observations and practical mitigation efforts, lacking a comprehensive theoretical foundation. Despite its documented detrimental effects on users and the integrity of decentralized finance protocols, the absence of a formal, abstract model hindered the development of rigorous security guarantees. This theoretical gap presented a significant academic challenge, preventing a systematic approach to analyzing and proving resilience against MEV-related economic exploits.
Analysis
The core innovation lies in establishing a formal theory of Maximal Extractable Value through a generalized, abstract model of blockchain operations and smart contract interactions. This model conceptualizes MEV not merely as observed phenomena, but as a mathematically definable consequence of transaction inclusion, exclusion, and reordering capabilities inherent to block production. Unlike prior empirical analyses, this approach provides a foundational primitive for reasoning about MEV, allowing for the derivation of security proofs that can formally guarantee a protocol’s resilience against specific economic attacks.
Parameters
Outlook
This foundational MEV theory opens significant new avenues for cryptographic research and mechanism design within blockchain systems. Its immediate application lies in enabling the construction of provably secure protocols and smart contracts that are inherently resistant to MEV, moving beyond reactive mitigations to proactive design. In the next 3-5 years, this framework could unlock a new generation of DeFi applications with verifiable fairness guarantees, fostering greater user trust and systemic stability. Furthermore, it establishes a robust academic basis for exploring the economic security of complex decentralized architectures.
