MEV as Dominant Blockchain Scaling Limit Unveiled ∞ Research

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Briefing

The research addresses the critical problem of Maximal Extractable Value (MEV) fundamentally limiting blockchain scalability, despite advancements in technical throughput. It introduces a foundational breakthrough ∞ a novel MEV auction design integrating programmable privacy via Trusted Execution Environments and explicit bidding. This new theory implies a future blockchain architecture where efficient blockspace utilization is paramount, leading to genuinely lower transaction fees and unlocking new application categories.

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Context

Historically, blockchain scaling discussions centered on increasing raw technical throughput through methods like sharding or improved consensus algorithms. The prevailing assumption was that greater blockspace capacity would directly translate to lower fees and enhanced utility. However, this perspective overlooked the complex economic incentives of MEV, particularly the emergence of “spam auctions” where searchers consume newly available blockspace with speculative, wasteful transactions, thereby neutralizing scaling benefits and maintaining elevated transaction costs.

Analysis

The paper’s core mechanism proposes a two-pronged approach to reclaim blockspace efficiency. First, “programmable privacy” leverages Trusted Execution Environments (TEEs) to grant MEV searchers real-time visibility into transaction flows. This allows searchers to discover arbitrage opportunities off-chain without the ability to frontrun or sandwich users, thus eliminating the need for wasteful on-chain probing.

Second, “explicit bidding” replaces the current inefficient “spam auction,” where competition is proxied by raw gas consumption, with a direct monetary auction for precise transaction inclusion and ordering rights. This fundamentally differs from previous approaches by directly addressing the economic incentives that drive blockspace congestion, transforming MEV extraction from a parasitic activity into a transparent, value-capturing mechanism.

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Parameters

Core Concept ∞ MEV as Scaling Limit
New Mechanism ∞ Programmable Privacy, Explicit Bidding
Key Technology ∞ Trusted Execution Environments (TEEs)
Problematic Behavior ∞ On-chain Spam Searching
Impacted Chains ∞ Ethereum, L2s (OP-Stack rollups), Solana
Key Authors ∞ Robert Miller (Flashbots)
Publication Date ∞ June 15, 2025

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Outlook

Future research will explore the inherent trade-offs of explicit auctions, specifically the minimum block times imposed by networking latency and computational requirements. The real-world application of this theory could unlock truly scalable blockchains with consistently low fees within 3-5 years, fostering novel use cases such as on-chain social networks and agentic micropayments. This framework opens new avenues for academic inquiry into market design for decentralized systems, emphasizing economic efficiency over raw technical capacity.

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Verdict

This research fundamentally redefines blockchain scaling by identifying MEV as its primary economic bottleneck and proposing an innovative market design solution.

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