Formalizing Maximal Extractable Value for Blockchain Security Proofs → Research

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Briefing

This paper addresses the critical problem of Maximal Extractable Value (MEV) by proposing a foundational formal theory grounded in a general, abstract model of blockchains and smart contracts. This breakthrough provides a rigorous framework for understanding and analyzing MEV, moving beyond empirical observations to establish a basis for provable security against these economic attacks. The most important implication is the enablement of designing blockchain architectures and decentralized applications with inherent MEV resistance, fundamentally enhancing the security and fairness of future on-chain interactions.

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Context

Prior to this research, Maximal Extractable Value (MEV) was predominantly understood through empirical observations of economic attacks on public blockchains, where adversaries manipulate transaction ordering, inclusion, or exclusion to extract value. Despite the significant real-world impact and detrimental effects on users and network stability, the theoretical foundations underpinning MEV remained insufficiently established. This limitation hindered the development of systematic, provably secure countermeasures, leaving a gap in the academic understanding of this pervasive blockchain challenge.

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Analysis

The paper’s core mechanism involves constructing a formal theory of MEV through a general, abstract model of blockchains and smart contracts. This new primitive conceptually frames MEV as a set of adversarial strategies within a precisely defined system, allowing for the rigorous analysis of value extraction through transaction manipulation. This approach fundamentally differs from previous, largely empirical studies by providing a mathematical and logical framework. The model delineates the capabilities of adversaries to reorder, drop, or insert transactions, and quantifies the value extracted, thereby establishing a theoretical bedrock for understanding and mitigating these complex economic attacks.

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Parameters

Core Concept → Maximal Extractable Value (MEV)
New System/Protocol → Formal Theory of MEV
Key Authors → Massimo Bartoletti, Roberto Zunino
Publication Platform → arXiv
Publication ID → arXiv:2302.02154v5
Last Update → 2025-05-25

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Outlook

This foundational theory of MEV opens significant new avenues for research and development, particularly in the design of provably secure blockchain protocols and decentralized applications. In the next three to five years, this work could lead to the development of novel mechanism designs and cryptographic primitives that inherently mitigate MEV, fostering more equitable and robust on-chain environments. Potential real-world applications include fairer transaction ordering in decentralized exchanges, enhanced security for lending protocols, and more resilient blockchain architectures less susceptible to economic manipulation.

This research fundamentally establishes the theoretical underpinnings of Maximal Extractable Value, crucial for future blockchain security and mechanism design.

Signal Acquired from → arXiv.org