Mining extraction value. That phrase is essentially one of the largest fundamental risk spaces that exist for blockchain -based systems. The original conception of a block chain included incentives for miners (or other consensus participants who decide the transactions order) to obtain income based on any initial block subsidy in circulation in each block, in addition to the rates paid by users to confirm their transactions.
These two things are no longer the only sources of income that encourage the actions of the miners. There are now more complicated contracts and protocols to facilitate the creation and exchange between the different assets housed in a block chain. These contracts, by design, allow open access to anyone. If you have a required asset and can meet the specified exchange conditions, any user can interact unilaterally with the contract or protocol to exchange assets.
Since miners finally decide which transactions are accepted in blocks, this gives the miners preferential access to “jump the line” when interacting with such contracts and protocols. This presents a serious problem, depending on the degree of complexity involved in successfully extracting the value of different contracts or protocols.
This creates a great centralization pressure in mining the more complicated these contracts and protocols become. Miners have the ability To collect all this value, but to do it, they really need to analyze the current state of these contracts. The more complex the contract, the more complex and expensive the analysis is, and the more centralization pressure creates for the miners.
This is horrible for censorship resistance.
Separation from the proposals builder
Ethereum is the son of the Mev poster that went wrong. Due to the high complexity of the contracts deployed in Ethereum, the amount of MEV created in that chain has been very large. Naturally, they occurred to them an attempt of solutions in response to the problem.
The separation of the Builder of Proponents sought to mitigate the risks of Centralization of MEV creating separation between the two roles involved in the movement of the block chain forward. The builders (blocks of block templates) handle the paper of assembling blocks in blocks, and the proposals (miners/stakers) choose from the block templates available to select the most profitable. The idea behind the proposal is that we can let centralization affect template producers, but safeguard her miners/stakers. As long as there is a competitive market for template production, things must still be safe.
In practice, this is not what happened. The reality is that there are only a few competitive builders, and when the most profitable template producers decide to censor something, all the miners/stays censor effectively that you choose to use those profitable block templates. Since it is economically irrational not to choose the most profitable template, this really does not resolve the risk of censorship.
Mevpool
He Mevpool proposal By Matt Corallo and 7D5X9 it is an attempt to modify the proposal of PBS for Bitcoin in a way that really provides mitigation for the risk of censorship.
The main difference between PBS and Mevpool is the subcontracting of template construction is not total, in Mevpool Miners it still builds the final block template. They simply subcontract the selection process of the subset of transactions that optimize the extraction of MEV, including those of the block templates that are built. This aims to allow miners to maximize their MEV cut while keeping the freedom to include the transactions they want, instead of the binary choice to accept censorship to obtain maximum profits or prevail the profits to avoid censorship under PBS.
The proposal requires establishing market relays to house orders books where MEV extractors can publish their proposed transactions and rates that will pay the miners to include them in a block. They would allow the extractor to define the conditions under which they will pay the conclusion of the transaction, that is, only if they are the first transaction to interact with a specific contract in the block. The markets would also admit sealed orders or without stamps, that is, the sealed requests are orders in which the proposed transaction is not actually revealed to the miner until they extract the block.
How does that work? All that miners need is the hash of a transaction to include in the Merkle tree to start mining, they do not need the complete transaction until they find a valid block and they will transmit it. But they need to know that the transaction is valid. This is the role that market relays have to fill.
There are two ways in which they can do this. First, the simplest way is that they are a purely reliable third. Mev extractors would send their transactions to retransmission operators, and miners would connect to these relays. Then they would request the list of sealed offers and without sealing the market operator, including the hash necessary to include sealed offers, and that a custom software piece builds the block template. Once they successfully find a valid block blocker, they would send the block less the missing data to the relay.
Then, the relay would include the complete sealed transactions, transmit the block and then send the complete sealed transactions to the miner so that they could also transmit the block. Throughout this process, the MEV extractor rate would be kept in a warehouse deposit by the market relay, and released to the miner after finding a valid block.
This requires trusting a lot in the relay, both by the miners and for the Mev extractors that pay them.
The second option is the use of a confidence execution environment (TEE) to handle the construction of block templates by the miners, as well as managing the encrypted sealed offers. The miners would execute the custom template software and a bitcoin node inside the TEE. After the miners have received the sealed offers and without stamps and built their block, the shirt would sign a certification of the block and provide the market for the relay of the session key.
The market would encrypt sealed transactions and a transaction that pays its rate to the session key. After the miner finds a valid blockhash that meets the objective of difficulty, the shirt would decipher the sealed transactions and allow them to transmit the complete block and collect their fee of the MEV extractors. In this scenario, all involved have to trust the shirt to stay safe.
The final result
It is very likely that the final result of this is similar to PBS in Ethereum. There are only a handful of large builders that build MEV optimized templates for miners, and they all have transactions that are sent directly outside the band from the Mempool. It is trusting that the Mevpool Marketplace relays, both variations, publicly transmit the information of the requests that are sent to allow normal users to make an appropriate rates estimate. If the big markets could attract transactions presentations that were not sent in other places and retained that tariff data, this could affect users in general.
In addition, although it allows miners to freedom to select their own transactions outside the optimized subgroup of MEV, it still leaves room for large markets that receive presentation of private transactions to take advantage of that position. These markets could force miners to censor other transactions when retaining their request book data from them if there was no competitor with access to the same information.
Ultimately, I do not see this as a solution to the topic of MEV, plus a bandage or mitigation of the worst possible effects of it. It does not completely eliminate the risks and pressures of centralization, but improves them in certain areas.
This is a guest publication of Shinobi. The opinions expressed are completely yours and do not necessarily reflect those of BTC INC or Bitcoin magazine.
