Micro Lecture Maximal Extractable Value Flashcards
Why was the name changed from Miner Extractable Value to Maximal Extractable Value
- MEV can also be extracted by other participants of the network, it is not specific to miners
- In blockchains that don’t utilize PoW, there still exist block proposer nodes that have the right to order the transactions
What is frontrunning?
- When Bob inserts a transaction in front of A’s transaction.
MEV definition
- total value that can be extracted permissionlessly from the re-ordering, insertion or censorship of transaction within a block being produced.
What are the monetary incentives for miners to find the next block?
- Block reward
- transaction fees
- MEV a block offers
Are miners only incentivised to reorganize transactions or might they also reorganize something else?
How is that attack called or reorganzing something else?
- re-organize the block history to claim a MEV in a previous block
= Time-bandit attack
What is the problem with organising the block history?
- threat to the consensus stability
Time-bandit attack
- ## strategy in which previous blocks are reorganized and rewritten by miners in order to capture MEV
Undercutting attack
Miner forks the longest chain (ignores the current block). The miner does not build on top on the longest chain to get 20 but forks to get 270 and let the next miner get 250.
What are bidding wars?
When bots bid against each other trying to offer the highest transaction fee in order to be the first to leverage an MEV opportunity.
Disadvantages of MEV
- all the searchers who are not the winner lose money
- transaction fees can increase significantly.
What does MEV-Geth do?
- instead of submitting their bids to a public mempool, MEV searchers now submit sealed-bids to a private mempool
- since bids are not exposed until next block, bidders cannot iteratively try to frontrun each otehr
- MEV-Geth client refunds any tips back to the bidder whose bid is not accepted
Does MEV-Geth end MEV scene?
No. It is only a mechanism for bidders to bypass the Ethereum public mempool..
Is MEV quantifiable? And why?
No. MEV can be generated almost from any interaction of a user with a blockchain. Since smart contracts offer almost infinitely many ways for interaction it is infeasible to calculate an exact value.
Can lower bounds of MEV be calculated?
Yes. Lower bound can be calculated by summing the amount that has been extracted by known forms of MEV.
Is MEV larger than for Bitcoin or for Ethereum?
- MEV is much larger for Ethereum than for BTC because of the complexity of its application-layer behavior.