Discussion Post: Flashboys to Flashbots

Miner Extractable Value has become a heavily discussed and clearly high-stakes area of research in recent months.

A previous summary of the Flashboys 2.0 paper defined and attempted to quantify Miner Extractable Value. The researchers showed that, since 2017, arbitrage bots became more heavily used in the crypto ecosystem. These bots led to a rise in Priority Gas Auctions, a priority-seeking behavior observed on the Ethereum blockchain that drives up gas prices. The researchers also demonstrated how uncoordinated cooperation between Priority Gas Auction participants can be observed.

Since the publication of this paper, another significant development in the MEV problem space emerged: Flashbots. Building on Dan Robinson’s Dark Forest concept, Flashbots sought to illuminate some of this dark forest and provide tools for identifying and acting on MEV.

Source: explore.flashbots.net

Flashbots was introduced on ethresear.ch back in November of 2020. Since then, the project has seen a tremendous amount of use and attention. The project began to gain significant traction in the first part of 2021 alongside a rise in DeFi activity.

Source: Alex Svanevik

Anecdotally, many analysts have correlated slightly cheaper gas prices in 2021 to the rise in popularity of the Flashbots platform competing with and often beating out other transactions that attempt to extract MEV.

This has recently caused some degree of controversy primarily around the core question of whether MEV is 1) inevitable and 2) acceptable, or reprehensible.

Those who believe that MEV is a potentially solvable problem for the Ethereum ecosystem have criticized projects like Flashbots and labeled extraction of MEV as theft, arguing that it is net negative to mitigate the impact of MEV with tooling and visibility and not target the root problem.

Opponents of this viewpoint tend to frame MEV as an inevitable aspect of the Ethereum blockchain, and consider it a net positive to provide mitigation mechanisms. It is not yet objectively clear whether MEV as a root problem can be removed from the equation.

There is discussion of fair-ordering as a potential method of solving the root problem, though proponents of MEV mitigation strategies have claimed flaws in these constructions as well.

This is where a community of researchers can come in to measure and weigh different viewpoints and solutions to MEV problems.

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It’s a pretty good summary of flashbots currently and the developing stage. I also think that the impact of flashbots is totally over their original estimate for a while “it could free at least 2.4% of the current chain congestion by eliminating the use of frontrunning and backrunning and significantly increase mining rewards on Ethereum.” According to flashbot explorer in last October.


Source: https://explore.flashbots.net/

It’s curious about how can generate a block with 0 gas price tx on Ethereum like one of Minereum genesis addresses transaction. I got a little picture of this status from here. I think EIP-1559 can also be more discussed on future of this topic.

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Agree, I think there are a number of interactions between MEV and 1559 / similar developments that are pertinent to the future of Ethereum infrastructure.

WRT 0 gas, there is a host of discussions to be had around out-of-band payments vs miner tips.

I think @cipherix will be able to speak to these questions pretty soon.

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Are there any other positives to flashbots besides the net positive of mitigation? Do they help price discovery (when they aren’t overtly manipulating prices with flashloans I suppose)? Is that part of why there’s a bit of tension between oracles and certain AMMs?

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It allows for more democratized identification of MEV opportunities than just scanning the mempool.

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