Threshold Encryption Eliminates MEV at Consensus Layer ∞ Research

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Briefing

The foundational problem of Maximal Extractable Value (MEV) arises from the temporary centralization of transaction ordering authority, allowing block producers to manipulate the public mempool for profit. This new research proposes Blockchain Integrated Threshold Encryption (BITE) , a novel cryptographic primitive that integrates a threshold decryption scheme directly into the consensus mechanism. This system requires a supermajority of validators to collaboratively decrypt transactions only after their inclusion and final order within a block are irrevocably committed. This architectural shift removes the transparency window that enables front-running and sandwich attacks, establishing a cryptographically guaranteed fair execution environment for all transactions, a critical prerequisite for secure, autonomous decentralized finance and AI protocols.

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Context

The prevailing challenge in distributed systems and blockchain mechanism design has been the “fair ordering” problem, exacerbated by the rise of DeFi and the resultant MEV extraction. Traditional consensus protocols, whether leader-based BFT or Nakamoto-style, grant the block proposer unilateral control over transaction inclusion and ordering. This control transforms the public mempool into a predictable resource for adversarial value extraction, fundamentally compromising the principle of equitable access and execution. Established solutions, such as simple randomization or specialized auction mechanisms, have offered only partial mitigation, failing to eliminate the root cause of information asymmetry at the block production layer.

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Analysis

The core mechanism, Blockchain Integrated Threshold Encryption (BITE), functions as a cryptographic shield around the transaction lifecycle. When a user submits a transaction, it is first encrypted using a public key shared by the validator set. This encrypted transaction is broadcast to the network and remains opaque throughout the mempool and block construction phases. The consensus protocol then finalizes the block and its transaction order based on the encrypted data, which is computationally meaningless to the validators.

Decryption is only possible once the block is finalized and its order is immutable. This requires a threshold of validator-provided decryption shares to reconstruct the original, executable transaction. The system achieves censorship resistance and fairness by ensuring that no single entity, including the block proposer, can discern the contents of a transaction before its final, unchangeable position in the ledger is determined.

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Parameters

New Cryptographic Primitive ∞ Blockchain Integrated Threshold Encryption (BITE)
Decryption Requirement ∞ Supermajority of validator nodes must contribute a decryption share
MEV Impact ∞ Eliminates MEV at the consensus layer
Key Generation ∞ Distributed Key Generation (DKG) process for committee rotation

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Outlook

The successful integration of BITE into a Layer 1 consensus model sets a new standard for cryptographic security in decentralized systems, opening new avenues for research in fully encrypted execution environments. In the next three to five years, this foundational approach is projected to unlock truly private and fair application layers, enabling new classes of sophisticated DeFi instruments and autonomous AI agents that rely on provably neutral execution. Future research will focus on optimizing the overhead of the threshold decryption process and formally verifying the security bounds of DKG in dynamic, large-scale validator sets to ensure both performance and long-term cryptoeconomic stability.

This research establishes a new cryptographic baseline for transaction fairness, fundamentally shifting MEV mitigation from an economic challenge to a provable impossibility at the consensus layer.

threshold decryption scheme, encrypted transaction execution, consensus level security, provably fair ordering, zero MEV architecture, validator committee rotation, cryptographic key generation, secure mempool design, post-execution decryption, autonomous agent security Signal Acquired from ∞ medium.com