Formalizing MEV: A Foundational Theory for Blockchain Security → Research

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Briefing

This research addresses the critical problem of Maximal Extractable Value (MEV), a class of economic attacks where malicious actors exploit transaction ordering, insertion, or omission on public blockchains to extract significant value from smart contracts. The foundational breakthrough is the proposal of a formal, abstract theory of MEV, establishing a rigorous mathematical model for these complex interactions. This new theoretical framework provides the essential groundwork for developing provably secure mechanisms against MEV attacks, offering a pathway to enhance the security and fairness of future blockchain architectures.

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Context

Prior to this work, the burgeoning impact of MEV on mainstream Decentralized Finance (DeFi) protocols was empirically evident, leading to detrimental effects on users and the overall blockchain network. However, a significant theoretical limitation persisted → the foundational understanding of MEV, despite its real-world prevalence, remained insufficiently established. This gap hindered the systematic development of robust countermeasures and a comprehensive academic discourse on the economic vulnerabilities inherent in blockchain transaction processing.

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Analysis

The core mechanism of this paper is the construction of a formal theory of MEV, built upon a general, abstract model of blockchains and smart contracts. This model allows for the precise definition and analysis of MEV, moving beyond empirical observations to a rigorous conceptual understanding. The theory fundamentally differs from previous approaches by providing a foundational language to describe how adversaries, through actions like transaction reordering, can extract value. It explores properties such as the monotonicity of MEV concerning mempools and wallets, and notably, its non-monotonicity with respect to the set of participating actors, revealing nuanced dynamics of value extraction.

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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 → arXiv:2302.02154v5
Latest Revision Date → May 25, 2025

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Outlook

This foundational theory of MEV opens new avenues for research into provably secure blockchain protocols and smart contract designs. In the next 3-5 years, this work could directly inform the development of MEV-resistant transaction ordering mechanisms, more equitable fee markets, and novel protocol designs that inherently mitigate adversarial value extraction. The academic community can leverage this abstract model to conduct more rigorous security analyses, fostering a deeper understanding of economic incentives and vulnerabilities within decentralized systems.

This research establishes a critical theoretical bedrock for understanding and ultimately combating Maximal Extractable Value, fundamentally enhancing the security principles of blockchain technology.

Signal Acquired from → arXiv.org