Ethereum developers propose MEV-burn mechanism

Ethereum developer Justin Drake unveiled a mechanism to smooth and redistribute peaks MEV through burning within the framework of the ‘proposer-builder separation’ concept (PBS).

MEV burn is the natural continuation of EIP-1559

Bankless episode: https://t.co/sLvyBU1nwN

ethresearch post: https://t.co/0TMxy2ifm5

— Justin Ðrake ?? (@drakefjustin) May 15, 2023

In July 2022, Ethereum co-founder Vitalik Buterin named the implementation of PBS as one of the most significant future changes to the network.

It is expected that separating the roles of validators will reconfigure the MEV extraction economics and promote the deployment of sharding to dramatically increase the network’s throughput.

However, according to Ethereum researchers, while the upgrade’s development is at an ‘advanced stage’, prototypes in clients are expected in a year or more.

The developers said that their MEV burn solution is a simple overlay atop PBS and will deliver security benefits as well as economic gains, analogously to EIP-1559.

For the standard PBS-based MEV extraction path they proposed adding to the proposer’s block submission a base payload fee that burns in any case. For builders in the proposal-confirmation phase a time window is envisaged to set a lower bound on the fee. As a result, proposers maximise the reward.

In MEV distribution mechanisms without burning, the advantage goes to block builders with the largest balance. This leads to centralisation, giving an edge to large players. The developers’ proposed solution lowers the capital requirements for validators.

Researchers say that smoothing MEV peaks will enhance network security by improving macro-consensus stability and resilience to censorship.

Earlier in April, more than 30 Ethereum projects joined forces to launch the MEV Blocker tool designed to protect users from front-running and ‘sandwich attacks’ within MEV.

Organization Flashbots presented a beta version of the MEV-Share protocol, which distributes the ‘maximally extractable value’ among users.