Formalizing MEV: Rigorous Model for Blockchain Economic Security → Research

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Briefing

This paper addresses the critical problem of Maximal Extractable Value (MEV) on public blockchains, where adversaries exploit transaction ordering to extract significant value, leading to detrimental effects on users and network stability. The foundational breakthrough lies in proposing a formal theory of MEV, built upon a general, abstract model of blockchains and smart contracts. This rigorous framework provides the essential theoretical basis for developing provable security measures against MEV attacks, thereby enhancing the overall robustness and fairness of future blockchain architectures.

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Context

Before this research, Maximal Extractable Value (MEV) was largely understood through empirical observations of economic attacks on mainstream Decentralized Finance (DeFi) protocols. The prevailing theoretical limitation centered on the absence of a sufficiently established formal foundation for MEV. This lack of a rigorous model hindered the development of systematic methods for proving security against such attacks, leaving blockchain networks vulnerable to transaction manipulation and value extraction without a clear theoretical framework for mitigation.

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Analysis

The core idea of this research is the introduction of a formal theory for Maximal Extractable Value (MEV), grounded in an abstract model of blockchains and smart contracts. This new model fundamentally differs from previous approaches by moving beyond empirical descriptions of MEV to provide a precise, mathematical framework. It defines the conditions under which adversaries can reorder, drop, or insert transactions to extract value, thereby enabling the formal analysis of these economic attacks. This theoretical primitive allows for the systematic derivation of security properties and the design of countermeasures with provable guarantees, transforming the understanding of MEV from an observed phenomenon into a formally characterized problem.

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Parameters

Core Concept → Maximal Extractable Value (MEV)
System/Protocol → Formal MEV Theory
Key Authors → Bartoletti, M. and Zunino, R.
Publication Venue → arXiv
Subject Category → Cryptography and Security (cs.CR)
Latest Version Date → May 25, 2025

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Outlook

This foundational MEV theory opens new avenues for research into provably secure blockchain architectures and mechanism design. In the next 3-5 years, this theoretical framework could unlock real-world applications such as the development of MEV-resistant protocols, more equitable transaction ordering mechanisms, and novel incentive structures that align validator and user interests. The academic community can leverage this model to formally analyze existing and emergent MEV mitigation strategies, leading to a more secure and predictable decentralized ecosystem.

This research provides a critical theoretical underpinning for understanding and mitigating Maximal Extractable Value, which is essential for the long-term integrity and fairness of blockchain technology.

Signal Acquired from → arXiv.org