Unchained Why MEV Will Always Be Controversial - Ep. 482
Apr 18, 2023
In this enlightening discussion, Justin Drake, a researcher at the Ethereum Foundation, and Uri Klarman, CEO of bloXroute Labs, dive into the complexities of maximal extractable value (MEV) in the Ethereum ecosystem. They explore how MEV has evolved and its controversial nature. Highlights include debates on the MEV Blocker, the balance between back-running and front-running, insights on proposer-builder separation, and the potential benefits of MEV burn. Their differing perspectives spark a thought-provoking conversation about the future of fairness in blockchain.
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MEV Definition and Mechanics
- MEV (maximal extractable value) lets validators profit by ordering transactions, impacting trade prices.
- Validators can front-run, back-run, or sandwich trades to capture value.
MEV as Extractable Value
- Justin Drake views MEV as value generated by economic activity, extractable by various actors, including users and the protocol itself.
- He proposes an MEV precedence where users receive their generated MEV, the protocol receives excess MEV, and validators receive little.
MEV Blocker's Goal
- MEV Blocker aims to prevent MEV exploitation, claiming $1.38 billion in user losses.
- It blocks front-running but enables back-running, redistributing value to users and validators.