Formalizing Maximal Extractable Value for Blockchain Security Proofs ∞ Research

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Briefing

This research addresses the critical absence of a formal theoretical foundation for Maximal Extractable Value (MEV), a class of economic attacks prevalent in public blockchains. The paper introduces an abstract model of blockchains and smart contracts, alongside a comprehensive adversary model that formalizes knowledge inference and transaction manipulation capabilities. This framework provides a rigorous basis for defining MEV, distinguishing between its legitimate and malicious forms, and establishing a methodology for proving smart contract immunity to MEV attacks, thereby enhancing blockchain architecture and security by enabling provably MEV-free designs.

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Context

Before this research, the understanding of Maximal Extractable Value (MEV) was largely empirical, focusing on identifying and quantifying attacks without a unified theoretical definition. The prevailing academic challenge involved the lack of a rigorous framework to characterize the adversary’s powers and knowledge, making it impossible to formally prove a smart contract’s security against MEV. This theoretical limitation hindered the development of provably secure blockchain protocols and decentralized finance (DeFi) applications.

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Analysis

The paper’s core idea is a formal theory of MEV, grounded in an abstract model of contracts as state transition systems. It introduces a transaction deducibility function, κ, which precisely defines the set of transactions an adversary can infer by combining private knowledge with mempool observations. This refined adversary model allows for a formal definition of MEV extractable by a given set of actors, including a “bad MEV” variant that isolates attacks reliant on mempool exploitation. The theory culminates in the concept of “universal MEV,” which accounts for arbitrary adversaries and token redistributions, making the definition identity-agnostic and token-agnostic, crucial for practical security assessments.

Core Concept ∞ Maximal Extractable Value Formalization
New Mechanism ∞ Transaction Deducibility Function κ
Key Authors ∞ Massimo Bartoletti, Roberto Zunino
Adversary Model ∞ Formalized knowledge, reordering, dropping, insertion capabilities
MEV Classification ∞ Distinguishes “legit” MEV from “bad” MEV
Universal MEV ∞ Identity-agnostic and token-agnostic definition
Security Proofs ∞ Basis for proving MEV-freedom in smart contracts
Contract Model ∞ Abstract state transition systems
Key Axioms ∞ Extensivity, Idempotence, Monotonicity, Continuity, Finite Causes, Private Knowledge, No Shared Secrets
Practical Applications ∞ Evaluated on AMMs, Lending Pools, Hash Time-Locked Contracts

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Outlook

This foundational theory of MEV is a crucial precursor to developing robust analysis tools for smart contract security, enabling developers to design provably MEV-free protocols. The framework could unlock new capabilities for fairer transaction ordering and more resilient decentralized applications, moving beyond heuristic mitigations to mathematically assured security. Future research avenues include extending the model to long-range, multi-block attacks and refining the adversarial knowledge model to account for computational costs, pushing the boundaries of what is achievable in secure blockchain architecture.

This research establishes a vital theoretical bedrock for understanding and mitigating Maximal Extractable Value, fundamentally advancing the rigorous security engineering of decentralized systems.

Signal Acquired from ∞ arxiv.org