SAKA: A Novel MEV-Resistant Transaction Fee Mechanism ∞ Research

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Briefing

This paper addresses the fundamental challenge of designing effective transaction fee mechanisms (TFMs) in blockchain systems where block producers actively extract Maximal Extractable Value (MEV). It presents a novel model that distinguishes between “searchers” who identify value extraction opportunities and “proposers” who participate in consensus, thereby expanding the TFM design space. The core breakthrough is the Searcher-Augmented Knapsack Auction (SAKA) mechanism, which achieves dominant-strategy incentive-compatibility for both users and searchers, incentive-compatibility for passive block proposers, and sybil-proofness. This new theoretical framework and mechanism offer a pathway to more equitable and efficient blockchain transaction ordering, fostering greater system stability and user confidence in decentralized finance.

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Context

Prior to this research, established TFM models largely assumed passive block producers, whose utility functions focused solely on net consensus-layer rewards. This foundational assumption failed to account for the reality of “active block producers” in DeFi ecosystems, who derive significant value from application-layer transaction manipulation. This theoretical limitation led to impossibility results, demonstrating that no non-trivial TFM could simultaneously achieve incentive-compatibility for both users and block producers while also guaranteeing approximate welfare maximization.

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Analysis

The paper’s core idea is the SAKA mechanism, a sophisticated TFM that incorporates competitive searchers into the block production process. SAKA operates by selecting transactions and bundles based on their bid-to-size ratios, dynamically determining a threshold ratio. Transactions and bundles with ratios above this threshold are included, with the winning searcher’s bid (or second-highest bid, if applicable) determining payment for bundled transactions.

All user and searcher payments are burned, ensuring the block proposer remains passive and indifferent to block content beyond revenue. This design fundamentally differs from previous approaches by formally integrating MEV extraction into the mechanism design, transforming it from an external manipulation into a structured, auction-driven component that benefits overall system welfare.

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Parameters

Core Concept ∞ Searcher-Augmented Knapsack Auction (SAKA)
Key Authors ∞ Maryam Bahrani, Pranav Garimidi, Tim Roughgarden
Publication Venue ∞ 6th Conference on Advances in Financial Technologies (AFT 2024)
Key Properties ∞ DSIC for Users and Searchers, BPIC, Sybil-Proof
Welfare Guarantee ∞ Roughly 50% of maximum possible welfare (for small transaction sizes)

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Outlook

This research opens new avenues for designing robust transaction fee mechanisms that proactively address MEV. Future work can explore the dynamic adjustment of SAKA’s parameters in response to market conditions, further refining its welfare guarantees and adaptability. The potential real-world applications include more predictable and fair transaction execution for users across various blockchain networks and decentralized applications. Over the next 3-5 years, this theoretical framework could lead to the development of next-generation blockchain architectures with built-in MEV mitigation, fostering greater network health and preventing value extraction at the expense of users.

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Verdict

The SAKA mechanism fundamentally redefines transaction fee mechanism design by demonstrating a path to incentive-compatible, sybil-proof MEV mitigation, significantly advancing the foundational principles of blockchain economic security.

Signal Acquired from ∞ eprint.iacr.org