Formalizing MEV: Abstract Model for Blockchain Economic Attacks → Research

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Briefing

Maximal Extractable Value (MEV) represents a class of economic attacks where network adversaries manipulate transaction ordering to extract value from smart contracts. This paper addresses the insufficient theoretical foundations of MEV by proposing a formal theory grounded in a general, abstract model of blockchains and smart contracts. This foundational breakthrough provides a robust framework for developing provably secure protocols against MEV, enhancing the economic robustness and fairness of decentralized systems.

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Context

Prior to this research, the understanding of Maximal Extractable Value largely stemmed from empirical observations of economic attacks within decentralized finance. While the practical impact of MEV was evident, a comprehensive, formal theoretical framework to systematically analyze and counter these complex adversarial behaviors remained underdeveloped. This gap created challenges for rigorously proving security properties and designing effective mitigation strategies.

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Analysis

The core of this work is the development of a formal theory of MEV. This theory employs a general, abstract model of blockchains and smart contracts, allowing for a precise characterization of the mechanisms through which value is extracted. The model explicitly defines the adversarial capabilities, such as reordering, dropping, or inserting transactions, enabling a systematic analysis of their impact. This approach fundamentally differs from purely empirical studies by providing a mathematical basis for understanding MEV, moving beyond anecdotal evidence to formal proofs.

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Parameters

Core Concept → Maximal Extractable Value Formalization
Proposed Framework → Abstract Blockchain Model
Key Authors → Massimo Bartoletti, Roberto Zunino
Publication Venue → arXiv
Latest Revision → May 25, 2025

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Outlook

This formal theory of MEV opens critical avenues for future research, particularly in designing and formally verifying MEV-resistant blockchain protocols and smart contracts. The abstract model provides a powerful tool for analyzing the security implications of various transaction ordering mechanisms and consensus algorithms. Real-world applications could include the development of provably fair transaction inclusion policies and the creation of DeFi protocols inherently resilient to front-running and sandwich attacks, fostering a more equitable on-chain environment.

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Verdict

This research establishes a foundational theoretical framework for understanding and countering Maximal Extractable Value, a critical step towards building more secure and economically sound decentralized systems.

Signal Acquired from → arxiv.org