On April 5th, Stephane Gosselin, a former Numerai architect who is one of the initiators of Flashbots, tweeted that the Ethereum computing power supporting Flashbots has reached 27%. After just one week, the supported computing power has more than doubled to 58%.
Written by: Eric
Recently, Flashbots’ MEV-Geth node solution for Ethereum MEV has attracted widespread attention because of its over 50% computing power support rate. The impact of MEV on the public chain has already caused some concerns (for details, please refer to Paradigm: Comprehensive Interpretation of the Extractable Value of Ethereum Miners “MEV” ), and the MEV-Geth developed by Flashbots has successfully “cut Hu” in the official announcement. The solution idea, but has the problem really been solved?
What are Flashbots?
Flashbots is a research and development organization that aims to reduce the negative externalities and risks of the miners’ extractable value (MEV) on the smart contract public chain. The organization hopes to create a “permission-free, transparent and fair ecosystem for the smart contract public chain”. system”.
Its MEV-Geth node solution to deal with Ethereum’s high gas fees and congestion on the chain has received more than half of the network’s computing power. According to data from OKLink, the price of Ethereum gas has dropped by 45% from the beginning of the month. From the data, MEV-Geth does play a certain role in reducing gas fees.
Flashbots’ solution
MEV exists objectively and cannot be avoided, and Flashbots’ solution MEV-Geth is to eliminate such information asymmetry, expose arbitrage opportunities to the public and allow stakeholders to share it, as it said “light up the dark forest” ( Ethereum Dark Forest Accelerating its spread, how can Flashbots alleviate the “miner extractable value” crisis? ):
First of all, Flashbots realizes the identification of MEVs that may exist on the Ethereum network at the code level, and passes these arbitrage transactions to a third-party “searcher”. The “searcher” sorts these transactions to form a “transaction package”. These transaction packages will be evaluated in the dark bid auction hosted by the miners. The “transaction package” with the most profit is selected and a “block template” is generated. The template contains the transaction ranking information required to mine the block. In the end, the “block template” becomes the next block to be packaged on the chain.
It is worth noting that the MEV-Geth design distributes a part of the MEV benefits in the “block template” to the miners, so that miners no longer need to find the transaction with the highest gas, but only need to choose the “area” that maximizes the profit in the auction. Block template” can obtain even higher benefits than the traditional “priority gas auction” (PGA, that is, transactions with high gas prices can be confirmed first).
To put it simply, Flashbots uses an off-chain bidding model to share part of the MEV benefits to miners to alleviate the high gas fees caused by the on-chain PGA. At the same time, arbitrageurs cannot use gas fees to attract miners to preferentially package transactions, which will reduce the frequency of transactions, thereby alleviating network congestion and increasing handling fees.
From another perspective, with the addition of a large number of profit-seeking small and medium-sized miners, the possibility of large miners “monopolizing power” (that is, forcing the blockchain for arbitrage profits) is greatly reduced, which also protects the ether to a certain extent. The security of public chains such as Fang Fang. Coupled with the upcoming Ethereum Berlin hard fork due to the implementation of EIP-1559 (gas fee is directly burned and is no longer used as miners’ income), Flashbots’ solution is obviously more competitive for miners in terms of income.
It can be seen from the March report officially released by Flashbots that the three important data of “searchers”, “transaction packages” and “block templates” have increased several times. On average, miners start from each “block template”. ”Received an additional income of 0.2 ETH, the highest even reached 101.11 ETH, and the number of blocks submitted by MEV-meth increased from 0.83% in early March to 13.9%.
It seems that Ethereum welcomes MEV-Geth, but does Flashbots really solve the problem?
The popularity of MEV-meth will bring new problems
We have to admit that this scheme is indeed useful in reducing gas fees and network congestion, but at the same time, it also brings new problems.
Flashbots hopes to make the MEV itself public, which is its original intention for the blockchain to be “transparent”. But this transparency also brings opacity: if you don’t use MEV-meth, you can only see the final transaction sequence in the block, but the process of generating MEV is unknown. Although the original process of arbitrageurs to quickly complete transactions through PGA caused some negative effects, they still abide by the basic rules, but MEV-meth packs arbitrageurs and miners together, which may further increase the sandwich attack. The success rate. Even more frightening is that such profitable trading attacks can also be sorted in advance to maximize profits. This is obviously a departure from the original intention of fairness and transparency.
In addition, handing over the right of sorting transactions to the miners further expands the rights of the miners. There is not much intersection between the miners who originally maintained the blockchain ledger and the superstructure of Ethereum, and MEV-meth has allowed the two to cooperate and miners dominate. Such actions originally used to prevent miners from undermining the security of the blockchain due to profit-seeking have further increased this risk.
Flashbots are not the only solutions on the market that try to solve the problems caused by MEV. Both KeeperDAO and Archer DAO have put forward corresponding countermeasures against MEV. KeeperDAO allows arbitrageurs to form a cooperative relationship to reduce the impact of PGA, but the competition between arbitrageurs who use the KeeperDAO solution and other arbitrageurs will still generate high handling fees; Archer DAO also has the same idea as Flashbots: and Miners share the MEV benefits, but Archer DAO does not give the miners the right to decide, but the arbitrageur decides the transactions that need to be packaged. As a result, there are certain variables whether miners are willing to choose such a scheme.
The interests of miners, the interests of arbitrageurs, and the adverse effects of MEV seem to form a new “impossible triangle.” The current solution can only take into account the interests of the two parties. Whether existing solutions can learn from each other and cooperate (KeeperDAO once expressed their willingness to cooperate with Flashbots), and whether the three parties can achieve a balance through the distribution of benefits, these issues are worth looking forward to.
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