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.
