In the blockchain industry, MEV (Maximum Extractable Value) has always been a complex issue that cannot be ignored. It refers to the way miners or validators extract additional profits by manipulating the ordering, insertion or deletion of transactions in the block. Phenomenon, common MEV techniques include sandwich attack, front-running and liquidation arbitrage.
MEV performs differently on different public chains, from common arbitrage transactions on Ethereum, to serious sandwich attacks on Solana, to the MEV potential that is gradually emerging in public chains such as Bitcoin, BSC, and TRON. This article will take stock of the MEV phenomenon in major public chains, analyze its different implementation paths and its potential impact on users and the network.
Ethereum: Sandwich attacks have declined, mainly arbitrage
As the public chain with the largest transaction volume, Ethereum has always been the public chain with the most concentrated MEV phenomenon. Especially during periods of active trading in DeFi and NFTs. In 2023, the Ethereum Foundation suffered a MEV Bot sandwich attack when selling Ethereum, losing $9,101. The MEV Bot made a profit of approximately $4,060.
For ordinary users, MEV brings negative impacts in most cases, especially when behaviors such as sandwich attacks and front-running transactions are rampant. But as far as miners or validators are concerned, MEV is an additional income that cannot be ignored, especially during a period when block rewards are declining. MEV income can supplement the income level of miners and verifiers, and has certain positive significance for maintaining the stability and decentralization of the entire blockchain network.
In the classification of MEV, except for transactions that directly harm the interests of users such as sandwich attacks and front-running transactions, behaviors such as liquidation arbitrage are not considered harmful trading behaviors in most cases when it comes to maintaining market liquidity. Therefore, how to reduce harmful behaviors such as sandwich attacks and retain MEV such as liquidation and arbitrage has become a difficult problem to maintain MEV balance.
In order to solve the fairness issues brought by MEV while balancing the benefits of validators, Flashbots launched the MEV-Boost and Flashbots Protect protocols. MEV-Boost is a relay system that allows validators to obtain optimized blocks from external block builders through relay nodes that maximize the benefits of transaction ordering through a complex MEV extraction strategy. MEV-Boost introduces a transparent block construction process, avoiding traditional malicious MEV methods such as front-running and sandwich attacks.
Flashbots Protect is mainly designed for ordinary users to protect users' transactions from MEV attacks such as front-running and sandwich attacks. Users can submit private transactions through Flashbots Protect. These transactions will not be publicly broadcast to the public mempool of Ethereum, but will be sent directly to miners or validators that support Flashbots through private channels.
The proportion of private orders on Ethereum that are transmitted through protocols such as MEV-Boost or Flashbots Protect has always been around 30%, while the proportion of orders still transmitted through public Mempool is still as high as around 70%. This means that a large number of users do not like to use Flashbots Protect to initiate transactions. However, about 70% of transactions on Ethereum DEX are private orders initiated through Flashbots Protect. Currently, the proportion of MEV income on Ethereum is about 26%. This proportion shows that the main source of income for validators is mainly block rewards and does not solely rely on MEV income.
Currently, the number of validators registered for MEV-Boost on Ethereum reaches 1,470,000, accounting for more than 81%. Data on September 5 shows that the proportion of blocks generated through the MEV-Boost protocol in the past 14 days reached 89%. However, this does not mean that 89% of Ethereum orders are MEV orders transferred through privacy pools.
At present, the sandwich attack seems to have been greatly mitigated on Ethereum. According to Eigenphi data, the overall revenue from sandwich attacks in the past 30 days was $740,000, and arbitrage revenue during the same period was as high as $1,720,000.
Source: PANews
Solana: MEV problem intensifies, sandwich attack threatens user transaction security
The MEV problem on Solana has become increasingly serious in this bull market. According to a survey by Blockworks Research, in April 2024, MEV revenue on Solana has exceeded Ethereum. MEV revenue on Solana will be almost negligible until November 2023.
Compared with Ethereum, the reason why MEV on Solana is discussed more by the community is that its sandwich attack has seriously affected the transactions of ordinary users. PANews has previously conducted in-depth research on this topic, in which a sandwich attack bot with an address starting with arsc earned $30,000,000 in 2 months. In comparison, Uniswap’s revenue in the past month was only $31,000,000.
Related Reading: Solana’s Biggest Sandwich Attacker Makes $570,000 a Day to ‘Get’ $30,000,000 in 2 Months, Drawing Outrage
Regarding MEV on Solana, we have to mention Jito Labs. Jito-Solana developed by Jito Labs on Solana can be regarded as the Solana version of MEV-Boost. Although the implementation paths of the two are different, the overall ideas are similar. In order to help verifiers maximize the benefits of MEV. Jito has launched a block space auction mechanism that allows transaction initiators to pay a separate tip to validators to ensure that bundled transaction packages are executed first. In addition, in March, Jito announced that it would temporarily shut down its running mempool to reduce sandwich attacks, because this memory pool can be used by sandwich attackers to monitor the content of transactions initiated by users, but MEV robots can still monitor transactions by running an RPC node.
So Jito turning off the mempool didn't make sandwich attacks dead on Solana, it just made the bar higher. Teams that specialize in profiting from sandwich attacks have become more cunning under the pressure of the community.
According to PANews observation, the previously notorious arsc robot did not stop, but continued to carry out sandwich attacks by changing its skin. The scale of the attack is now larger than before, and it has even almost monopolized the sandwich attack on Solana. Sandwiched is a platform specially developed by the Ghost team to monitor Solana sandwich attacks. PANews carefully observed and found that the actual control addresses of the sandwich attack programs currently active on Solana are arsc. To put it simply, arsc writes the logic previously used for sandwich attacks into multiple smart contracts, and hundreds of addresses are deployed on each contract to execute the contract for attack. In this way, if you just track the address, you won't be able to see the correlation. According to a rough observation, the average number of addresses under each smart contract is about a few hundred to 1,000. Therefore, arsc may use tens of thousands of addresses for sandwich attacks.
Source: PANews
In the past year, Tips revenue (MEV tips) earned on Jito has exceeded 1,530,000 $SOL (worth approximately $198,000,000), and Ethereum MEV revenue during the same period was approximately $600,000,000.
BSC: Introducing MEV solutions similar to Flashbots, focusing on arbitrage
BSC and Ethereum have many similarities in the MEV extraction mechanism, and BSC has also introduced a MEV solution similar to Flashbots. On BSC, bloXroute’s MEV Relay is used. This solution uses private transaction packages (Bundles) to protect user transactions from being targeted by MEV robots in the public mempool, thereby reducing user losses.
Source: PANews
However, from a data point of view, the overall profit of MEV on BSC is much higher than that of Ethereum. According to Eigenphi, the total MEV income of the BSC chain in the past 30 days is approximately US$133,000,000, of which arbitrage income is approximately US$130,000,000, and sandwich attack income is approximately US$133,000,000. Just $2,800,000. Among them, data on August 22 showed that arbitrage income reached US$30,000,000 that day, which is somewhat abnormal. The total transaction volume of the entire BSC chain in August was only $20,000,000,000. It is indeed questionable why the MEV revenue data can reach such a high value.
Ethereum L2: MEV has not yet reached scale, and liquidation returns are the main focus.
There are currently almost no data platforms on the specific situation of MEV on Ethereum Layer 2. According to the paper research by Arthur Bagourd and Luca Georges Francois, as of June 2023, the MEV revenue (Polygon, Arbitrum, Optimism) on Ethereum L2 is approximately $213,000,000. Among them, Polygon’s contribution accounted for the highest proportion, approximately US$213,000,000, mainly due to a few large transactions that increased overall profits. Arbitrum MEV withdraws total profit of approximately $250,000, Optimism’s figure is approximately $250,000. Overall, excluding extreme data, MEV on Ethereum L2 has not yet been able to form a large-scale stable income. This is mainly due to the large changes in the transaction volume of Ethereum L2. In addition, Ethereum L2’s MEV revenue mainly comes from liquidation proceeds rather than sandwich attacks. Recently, Arbitrum adopted a transaction ordering mechanism called Timeboost, a relay system similar to MEV-Boost.
Source: PANews
Tron: MEV opportunities under the DPoS mechanism are limited
As one of the public chains with the largest transaction volume, TRON has recently experienced greater transaction volume due to the craze of meme coins. However, many users have pointed out that there are a large number of robot attacks on the Tron field. Subsequently, Tron founder Justin Sun stated that Tron does not have an MEV mechanism and that the current robot attacks are probabilistic attacks.
The consensus mechanism adopted by TRON is DPOS (Delegated Proof of Stake). Under this mechanism, there is usually no public mempool similar to traditional PoW and PoS. In a DPoS system, transactions are not first broadcast to public network nodes for selection by miners or validators. Instead, transactions are submitted by users to Super Representatives (SRs) or trustee nodes, which are authorized to generate blocks and confirm transactions. Unless these super representatives actively participate in MEV transactions, the probability of MEV occurring is generally low.
Bitcoin: MEV gradually emerges, mainly relying on inscriptions and miner behavior
Because Bitcoin is designed differently from Ethereum in that it uses a simple UTXO model, and each transaction is primarily a transfer of Bitcoin between the sender and receiver, transaction ordering does not trigger arbitrage or liquidation opportunities as complex as Ethereum's. In addition, there are no complex smart contracts on the Bitcoin network, which means that miners cannot use arbitrage or liquidation to withdraw MEV like they can on Ethereum.
However, with the emergence of Bitcoin ecology such as inscriptions, runes, and Layer 2, the potential of MEV is also emerging on Bitcoin. Of course, for miners, more MEV opportunities will make up for the reduction in mining rewards. However, as the Bitcoin protocol evolves, MEV has also begun to become a challenge that needs to be addressed in the Bitcoin ecosystem. However, because the MEV behavior of the Bitcoin ecosystem has not yet formed a large-scale and standardized model, relevant data has not yet been seen.
Overall, MEV manifests itself in different forms on major public chains. From the mature arbitrage mechanism of Ethereum to the rampant sandwich attacks on Solana, each ecosystem faces unique challenges and opportunities. As DeFi, NFT and smart contract technologies continue to evolve, the MEV phenomenon will continue to develop, and different public chains will continue to explore solutions that balance MEV revenue and user experience. In the future, how to effectively manage MEV will become an important issue for public chains to maintain decentralization and network fairness.
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
This article is reprinted with permission from: "PANews"
Original author: Frank, PANews
