Formalizing MEV: Foundations for Secure Blockchain Mechanism Design → Research

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Briefing

Maximal Extractable Value (MEV) attacks on public blockchains present a critical problem, lacking rigorous theoretical foundations despite their significant impact on decentralized finance and network integrity. This paper introduces a formal theory of MEV, utilizing a general, abstract model of blockchains and smart contracts. This theoretical framework enables the development of provably secure mechanisms, crucial for enhancing blockchain architecture and ensuring long-term economic stability and fairness.

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Context

Before this research, MEV was primarily understood through empirical observation of adversaries reordering, dropping, or inserting transactions for profit. The field lacked a unified, abstract model to systematically analyze and predict these complex economic interactions. This informal understanding posed a significant challenge to designing robust and fair decentralized systems.

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Analysis

The core idea is the establishment of a formal theory of Maximal Extractable Value within a general, abstract model of blockchains and smart contracts. This model rigorously defines the interactions between participants and the potential for value extraction through transaction manipulation. The paper moves beyond descriptive accounts of MEV, providing a foundational mathematical language to characterize its various forms. This formalization enables a systematic approach to analyzing MEV’s impact and designing countermeasures, fundamentally differing from prior empirical or ad-hoc analyses.

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Parameters

Core Concept → Maximal Extractable Value (MEV) Formalization
New System/Protocol → Formal MEV Theory and Abstract Blockchain Model
Key Authors → Bartoletti, M. Zunino, R.
Publication Venue → arXiv
Last Revision Date → May 25, 2025

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Outlook

This formal theory establishes a crucial bedrock for developing provably secure blockchain protocols and MEV-resistant mechanism designs. It unlocks new research avenues in cryptographic security and economic game theory, focusing on mitigating adversarial transaction manipulation. The practical applications include designing fairer transaction ordering systems and more robust DeFi protocols, ensuring greater network integrity and user protection.

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Verdict

This research provides the indispensable theoretical grounding required to systematically address and mitigate Maximal Extractable Value, thereby fortifying the foundational principles of blockchain security and fairness.

Signal Acquired from → arXiv.org