Briefing
The proliferation of Maximal Extractable Value (MEV) attacks on public blockchains has exposed a critical gap in their theoretical underpinnings, allowing adversaries to exploit transaction ordering for significant financial gain. This paper introduces a foundational theory of MEV, grounded in a general, abstract model of blockchain systems and smart contracts, which provides the necessary rigorous framework for defining universal MEV and axiomatizing adversarial knowledge. This breakthrough enables the development of provable security against these economic attacks, promising a more equitable and robust future for blockchain architecture by mitigating systemic value extraction.
Context
Prior to this research, the theoretical foundations of Maximal Extractable Value remained insufficiently established, despite the pervasive and economically significant impact of MEV attacks on mainstream Decentralized Finance (DeFi) protocols. The prevailing challenge involved the absence of a rigorous definition for MEV and a formal characterization of adversarial capabilities, hindering the ability to formally prove the security of smart contracts against such exploits.
Analysis
The paper’s core mechanism introduces a formal theory of MEV by constructing a general, abstract model of blockchains and smart contracts. This model defines “universal MEV” as the maximal gain an adversary can achieve, independent of their specific identity or wealth. It further axiomatizes adversarial knowledge, framing MEV for a given set of actors as the maximum profit attainable by executing transaction sequences derived from their private information and mempool observations. This approach fundamentally differs from previous, less formal understandings by providing a precise, mathematical basis for analyzing and proving security against transaction reordering and insertion attacks.
Parameters
- Core Concept → Maximal Extractable Value (MEV)
- New Primitive/Model → Formal Theory of MEV
- Key Authors → Massimo Bartoletti, Roberto Zunino
- Publication Date → May 25, 2025 (v5)
- Problem Addressed → Insufficient theoretical foundations for MEV attacks
Outlook
This formal theory of MEV opens new avenues for research into provably secure blockchain protocols and smart contract designs. In the next 3-5 years, this foundational work could lead to the development of novel MEV mitigation strategies and tools, potentially enabling the creation of more robust and fair decentralized applications. Real-world applications could include DeFi protocols with built-in MEV resistance, enhancing user trust and promoting greater capital efficiency by minimizing value extraction by malicious actors.
Signal Acquired from → arxiv.org
