Miner Extractable Value (MEV) represents one of the most critical risks associated with blockchain systems. Initially, blockchains offered miners incentives derived from block subsidies and transaction fees. However, as blockchain technology has evolved, these traditional revenue streams have expanded into more intricate contracts and protocols, allowing a broader range of asset exchanges on the blockchain.
With miners controlling which transactions are accepted into blocks, there exists a significant risk of centralization, particularly when miners can leverage their position to extract value before others. The complexity of these contracts creates a centralization pressure, pushing miners towards a monopoly on value extraction and undermining censorship resistance—a core principle for decentralized networks.
Ethereum is often cited as a prime example of how MEV can adversely affect a blockchain ecosystem. The introduction of Proposer Builder Separation (PBS) aimed to alleviate these centralization risks by distinguishing between builders who assemble transactions into blocks and proposers who select the most lucrative block templates. Unfortunately, the reality has fallen short, with only a handful of builders dominating the market. When profit-driven builders choose to censor transactions, they inadvertently force miners to follow suit, perpetuating the cycle of censorship.
In response to these challenges, the MEVpool proposal emerges as a potential solution. Proposed by Matt Corallo and 7d5x9, MEVpool modifies the PBS framework to better safeguard against censorship risks. Unlike PBS, where template construction is fully outsourced, MEVpool retains some autonomy for miners, allowing them to build block templates while also optimizing for MEV extraction. This approach provides a strategy for miners to pursue profit without sacrificing the inclusion of diverse transactions.
The implementation of MEVpool involves the establishment of marketplace relays functioning as orderbooks for MEV extractors. These relays allow miners to access both sealed and unsealed bids, determining transaction inclusion and optimizing fees for miners based on proposed interactions. However, this introduces a reliance on trusted third parties, presenting potential trust issues for both miners and MEV extractors.
Another avenue explored in MEVpool is employing a Trusted Execution Environment (TEE). This method secures the execution of block template construction and manages encrypted bids. Miners can set up their software within a TEE, ensuring critical data remains secure until a valid block is generated. This approach reinforces the system’s integrity, though participants must trust the TEE’s security.
Ultimately, while MEVpool presents a framework for addressing some of the MEV challenges faced by blockchain, it is not a cure-all. Although it offers miners the flexibility to select their own transactions, it does not mitigate the potential for large marketplaces to influence or coerce miners into censoring transactions based on private fee data. MEVpool should be viewed as a temporary measure rather than a fundamental resolution to the complexities surrounding MEV.