Minor’s removable value. This sentence is essentially one of the largest fundamental risk spaces that exist for Blockchain -based systems. The original conception of a blockchain included incentives for miners (or other participants in the consent that decide the ordering of transactions) to earn entries on the basis of any initial block subsidy is inserted in circulation each block in addition to the commissions paid by users to confirm their transactions.
These two things are no longer the only sources of revenue that encourage miners’ actions. More complicated contracts and protocols now exist to facilitate creation and exchange between the different activities hosted on a blockchain. These contracts, based on the design, allow open access to anyone. If you have a requested activity and can meet the specific exchange conditions, any user can interact unilaterally with the contract or the protocol for the exchange of activities.
Since in the end the miners decide which transactions are accepted in blocks, this gives the miners preferential access to “jump the line” in the interaction with these contracts and protocols. This presents a serious problem, depending on the degree of complexity involved in the extraction of value by different contracts or protocols.
This creates enormous centralization pressure on the mining of these more complicated contracts and protocols. Miners have the capacity To collect all this value, but to do this they must actually analyze the current state of these contracts. The more complex the contract, the more complex and expensive is the analysis and more centralization pressure it creates for miners.
This is horrible for censorship resistance.
Proponer Builder separation
Ethereum is the child of mev posters gone wrong. Due to the high complexity of the contracts distributed on Ethereum, the quantity of Mev created on that chain was very large. Of course they devised attempted solutions in response to the problem.
The separation of proponent manufacturers tried to mitigate the risk of centralization of Mev creating separation between the two roles involved in advanced the blockchain. The manufacturers (creators of block models) manage the role of the assembly actually of the transactions in blocks and proponents (miners/stakers) choose among the block models available to select the most profitable one. The idea behind the proposal is that we can let the centralization influence the manufacturers of models, but we safeguard the miners/stakers from it. As long as there is a competitive market for the production of models, things should still be safe.
In practice this is not what happened. The reality is that there are only a few competitive manufacturers and when manufacturers of more profitable models decide to censor something, it is actually censored by any miner/stator who chooses to use those profitable lock models. Since it is economically irrational not to choose the most profitable model, this does not really solve the risk of censorship.
Mevpool
Matt Corallo’s Mevpool proposal and 7D5x9 is an attempt to change the PBS proposal for Bitcoin in a way that actually provides mitigation for the risk of censorship.
The main difference between PBS and Mevpool is the outsourcing of the construction of templates is not total, in the miners of Mevpool at the end they still build the final block model by themselves. They simply outsource the process of selecting the subset of transactions that optimize the extraction of Mev, including those in the block models that build alone. This aims to allow miners to maximize their cut of Mev while maintaining the freedom to include any transaction they want, unlike the binary choice to accept censorship for the maximum profit or to renounce profits to prevent censorship pursuant to the PBS.
The proposal requires the creation of market relays to host orders books in which the MEV extractors can publish their proposed transactions and commissions they will pay to miners to include them in a block. They would allow the entertainer to define the conditions on the basis of which they will pay for the conclusion of the transactions, that is, only if they are the first transaction to interact with a specific contract in the block. The markets would also support the sealed or not sealed orders, i.e. the sealed requests are orders in which the proposed transaction is not actually revealed to the miner until they extract the block.
How does it work? All the miners they need is the hash of a transaction to be included in the Merkle tree to start mining, they don’t need the complete transaction until they find a valid block and go to transmit it. But they must know that the transaction is valid. This is the role that the relays of the market must play.
There are two ways in which this can do. First of all, the easiest way is that they are a third party purely trust. Mev extractors would present their transactions to relay operators and the miners would connect to these relays. Subsequently they would have requested the list of sealed offers and not sealed by the market operator, including the hash necessary to include sealed offers and have a piece of custom software, build the block model. Once they found a valid block correctly, they would send the block less the missing data to the relay.
The relay would therefore include complete sealed transactions, transmitted the block alone and therefore would send the miner the complete transactions sealed so that the block can also be transmitted. During this whole process, the Mev extractor tax will be held under warranty from the market relay and released to the miner after finding a valid block.
This requires a lot of confidence in the relay, both from the miners and from the mev extractors who pay them.
The second option is the use of a reliable execution environment (TEE) to manage the construction models by the miners, as well as the management of encores encores encrypted. The miners would have performed the custom model software and a bitcoin node inside the tee. After the miners received the sealed and not sealed offers and built their blockage, the Tee would have signed a certificate of the block and would have provided the market relay with a session key.
The market would have encrypted the sealed transactions and a transaction that paid to the miner his tax to the session key. After the miner found a valid block that reaches the objective of difficulty, the Tee would have decrypted the sealed transactions and allowed them to transmit the entire block and collect their taxes from the MEV extractors. In this scenario all the subjects involved must trust the tee to remain safe.
The final result
The final result of this is very probable in my opinion to be similar to PBS on Ethereum. There are only one handful of large manufacturers who build mev optimized models for miners and all have transactions directly sent to them outside the band from MemoMol. The relays of the Mevpool market, both variations, are reliable to publicly transmit information on the commissions on the orders presented to allow normal users to make an adequate estimate. If the large markets were able to attract transaction sending not sent elsewhere and retained such data, this could affect users in general.
Furthermore, while allowing miners the freedom to select their transactions outside the subgroup optimized for mev, still leave room for large markets that receive sending private transactions to take advantage of this position. These markets could force miners censorship of other transactions by retaining their data of the book of orders if there was no competitor with access to the same information.
In the end I don’t see it as a solution to the question of Mev, more than a stick or a mitigation of the worst possible effects. It does not completely remove the risks and pressure of centralization, but improves them in certain areas.
This is a post for Shinobi guests. The opinions expressed are entirely proper and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.