Formalizing Maximal Extractable Value: A Foundational Theory for Blockchain Security → Research

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Briefing

The proliferation of Maximal Extractable Value (MEV) attacks has exposed a critical gap in blockchain theory → the absence of a rigorous, formal definition. This paper introduces a foundational theory of MEV, establishing a comprehensive model for smart contracts and adversarial capabilities, including a novel transaction deducibility framework. This theoretical advancement enables precise security proofs against MEV, offering a crucial tool for designing resilient blockchain architectures and mitigating economic vulnerabilities. Its implications extend to developing robust analysis tools for contract MEV-freedom, fostering more equitable and secure decentralized ecosystems.

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Context

Prior to this research, the understanding of Maximal Extractable Value (MEV) largely relied on empirical observations and partial definitions, leaving its theoretical foundations insufficiently established. This limitation meant that proving a smart contract was “MEV-free” lacked a rigorous basis, hindering the development of provably secure decentralized applications. The prevailing challenge involved characterizing the complex, identity-agnostic powers of MEV adversaries within a formal framework.

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Analysis

The paper’s core contribution is a comprehensive formalization of MEV, built upon an abstract model of smart contracts and their state transitions. It introduces a sophisticated adversary model, notably defining “transaction deducibility” (κA(X)), which quantifies the information an adversary can infer by combining private knowledge with public mempool data. This mechanism fundamentally refines prior approaches by accounting for the full scope of adversarial information synthesis, allowing for the distinction between “legitimate” and “bad” MEV.

Furthermore, the concept of “universal MEV” is established, abstracting away specific actor identities and wealth through token redistribution to represent the maximal extractable gain by any arbitrary adversary. This framework enables the rigorous assessment of a contract’s MEV-freedom through formal proofs.

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Parameters

Core Concept → Universal Maximal Extractable Value
New Mechanism → Transaction Deducibility Function (κA(X))
Authors → Massimo Bartoletti, Roberto Zunino
Publication Venue → arXiv (cs.CR)
Key Axiom → Axiom of Finite Tokens
Model Focus → Single-block MEV extraction
Primary Application → MEV-freedom proofs for smart contracts

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Outlook

This foundational MEV theory opens new avenues for rigorous security analysis, moving beyond empirical observations to provable guarantees for smart contracts. Future research will likely extend this model to address long-range MEV attacks and incorporate computational costs into adversarial knowledge, refining its real-world applicability. This framework will be instrumental in developing automated analysis tools, ultimately enabling the design of more secure and equitable decentralized finance protocols.

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Verdict

This formal theory of Maximal Extractable Value represents a critical advancement, providing the essential rigorous framework for constructing provably secure and economically resilient blockchain systems.

Signal Acquired from → arxiv.org