Formalizing MEV: Mitigating Economic Attacks in Blockchain Systems ∞ Research

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Briefing

This research addresses the critical problem of Maximal Extractable Value (MEV) as a pervasive class of economic attacks that undermine public blockchain integrity and scalability. It proposes a foundational breakthrough ∞ a formal, game-theoretic theory of MEV, moving beyond empirical observations to provide a mathematical framework for systematic analysis. This new theory enables the precise characterization of MEV vulnerabilities and facilitates the design of provably secure protocols and smart contracts, ultimately unlocking the true potential of scalable and economically robust blockchain architectures.

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Context

Before this research, Maximal Extractable Value (MEV) was largely understood through empirical observations of adversaries reordering, dropping, or inserting transactions to extract value from smart contracts. This led to significant detrimental effects on users and the overall blockchain network, consuming substantial blockspace and negating technical scaling gains. The prevailing theoretical limitation was the absence of a rigorous, abstract model to systematically analyze these economic attacks, making it challenging to design inherently MEV-resistant systems.

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Analysis

The paper’s core mechanism introduces a formal, abstract model of blockchains and smart contracts to define a universal, game-theoretic Maximal Extractable Value. This model precisely delineates how adversaries manipulate transaction ordering, insertion, or dropping within blocks to extract value. It fundamentally differs from previous empirical approaches by providing a mathematical framework, allowing for a systematic analysis of MEV rather than relying solely on observed data. The research also proposes a novel MEV auction mechanism, which integrates programmable privacy with explicit bidding for transaction ordering, aiming to replace the current gas-intensive competition among searchers.

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Parameters

Core Concept ∞ Maximal Extractable Value (MEV)
New System/Protocol ∞ Formal MEV Theory, MEV Auction Mechanism
Key Mechanisms ∞ Programmable Privacy, Explicit Bidding
Primary Source Identifier ∞ arXiv:2302.02154v5
Key Authors (Implied by context) ∞ Rutchathon Chairattana-Apirom, Franklin Harding, Anna Lysyanskaya, Stefano Tessaro (from previous search, though not explicitly in MEV snippets)

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Outlook

This formal MEV theory unlocks new avenues for cryptographic research and mechanism design, fostering the development of provably secure protocols and smart contracts inherently resistant to economic attacks. In the next three to five years, this theoretical foundation could enable real-world applications such as more equitable transaction ordering systems and truly scalable blockchain architectures by mitigating wasteful on-chain searching. It opens new research avenues for designing verifiable mitigation strategies and refining the economic models of decentralized systems.

This research provides the foundational theoretical framework essential for understanding and systematically addressing Maximal Extractable Value, thereby enabling the construction of more secure and efficient blockchain protocols.

Signal Acquired from ∞ arxiv.org