MEV Limits Blockchain Scaling, Demands New Economic Design ∞ Research

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Briefing

This research posits a fundamental shift in the discourse surrounding blockchain scalability, identifying Maximal Extractable Value (MEV) as the dominant limiting factor. It proposes that current technical throughput advancements are frequently neutralized by economically rational MEV bots, which consume newly available blockspace through wasteful on-chain searching. The core breakthrough lies in reframing scalability as an economic problem, advocating for protocol-level interventions such as programmable privacy and explicit MEV auctions to reclaim efficiency and ensure benefits reach users. This new theory implies a critical re-evaluation of blockchain architecture, emphasizing economic design alongside technical optimization for future robust and equitable decentralized systems.

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Context

Prior to this research, the prevailing academic challenge in blockchain scalability centered on raw technical throughput, focusing on increasing transaction processing capacity through methods like sharding or layer-2 rollups. The established theoretical limitation assumed that providing more blockspace would inherently lead to lower fees and greater network utility. However, the existing market structure, particularly the competitive dynamics of MEV extraction, has introduced a significant economic counterforce, demonstrating that simply increasing block capacity does not guarantee improved user experience or network efficiency.

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Analysis

The core idea presented is that MEV, specifically through spam bots, fundamentally limits blockchain scaling by consuming newly available blockspace. This occurs because searchers are incentivized to flood blocks with transactions to capture MEV, even if these transactions are wasteful or low-value. The paper introduces the concept that this market failure prevents the benefits of technical scaling from reaching real users. It proposes a new MEV auction design that incorporates programmable privacy and explicit bidding for transaction inclusion and ordering, aiming to allocate blockspace more efficiently and mitigate the negative externalities of MEV-driven spam.

Core Thesis ∞ MEV as Dominant Scaling Limit
Key Author ∞ Robert Miller
Publication Venue ∞ Flashbots Writings
Publication Date ∞ June 15, 2025
Observed MEV Consumption ∞ 40% of Solana blockspace by bots
Rollup Gas Usage by Spam Bots ∞ >50% of gas, <10% of fees
Proposed Solution Components ∞ Programmable privacy, explicit MEV auctions

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Outlook

This research opens new avenues for mechanism design within blockchain protocols, shifting focus towards economic interventions for scalability. Future work will likely explore the precise implementation details of programmable privacy and explicit bidding mechanisms, including their security implications and economic equilibria. Real-world applications could unlock truly efficient and user-centric layer-2 solutions and mainnets, where blockspace is optimized for genuine utility rather than speculative MEV extraction. This perspective encourages the academic community to integrate economic theory more deeply into the foundational design of decentralized systems.

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Verdict

This research fundamentally redefines the blockchain scaling challenge, asserting that economic incentives, specifically MEV, now constitute the primary barrier to network efficiency and user benefit.

Signal Acquired from ∞ Flashbots Writings