Briefing
This paper addresses the critical absence of a formal theoretical foundation for Maximal Extractable Value (MEV), a class of economic attacks prevalent in public blockchains. It introduces a novel, abstract model of blockchains and smart contracts, which serves as the basis for a comprehensive theory of MEV. This foundational work provides the necessary framework for constructing rigorous proofs of security against MEV attacks, significantly advancing the understanding and mitigation strategies for these systemic vulnerabilities in decentralized systems.
Context
Before this research, the phenomenon of Maximal Extractable Value was primarily understood through empirical observations of adversaries reordering, dropping, or inserting transactions to extract profit from smart contracts. This practical understanding, while identifying significant detrimental effects on users and network integrity, lacked a formal, established theoretical basis. The prevailing challenge was to move beyond anecdotal evidence and provide a rigorous conceptual framework to analyze and counteract MEV.
Analysis
The core idea involves developing a formal theory of MEV grounded in a general, abstract model of blockchain and smart contract interactions. This model conceptualizes the various vectors through which value can be extracted by block producers or other privileged participants. It fundamentally differs from prior approaches by providing a mathematical and logical structure to MEV, enabling a precise definition of attack vectors and the conditions under which value extraction occurs. This theoretical framework provides the bedrock for designing and verifying MEV-resistant blockchain architectures and protocols.
Parameters
Outlook
This foundational theory opens new avenues for designing blockchain protocols that are inherently more resilient to economic manipulation. Future research can leverage this formal model to develop and verify new consensus algorithms, transaction ordering mechanisms, and smart contract designs with provable security properties against MEV. Real-world applications could include more equitable transaction inclusion, reduced arbitrage opportunities for malicious actors, and enhanced overall network stability and user trust within decentralized finance.
Verdict
This research represents a pivotal step in formalizing the economic security of public blockchains, providing the essential theoretical tools to understand and ultimately mitigate Maximal Extractable Value.
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