A recent report from Flashbots reveals the dangerous consequences of Maximum Extractable Value (MEV) on blockchain scalability, demonstrating how spam auctions hinder efficient development.
The Scale of MEV-Induced Waste
MEV represents extra profit that miners or bots can extract by reordering transactions. Flashbots’ latest report indicates that the issue has escalated from ethical debates to a significant negative impact on blockchain performance. Analyzing data from OP-Stack rollups like Base and Optimism, along with information from Solana, shows how high-frequency arbitrage bots flood networks with numerous speculative transactions in search of quick profits. According to researcher Bert Miller, bots on Solana use about 40% of its blockspace while contributing a mere 7% of total fees. Meanwhile, on Ethereum L2s like Base and OP mainnet, spam bots reportedly consume more than half of the available gas yet pay only a fraction of the costs compared to legitimate users.
Path to Economic Efficiency
Flashbots proposed a fix that combines 'programmable privacy', allowing MEV searchers to see real-time order flows while shielding users from predatory strategies. It also suggested explicit bidding for transaction priority, aiming to shift competition from brute-force spamming to transparent, price-based auctions.
Potential Solutions to the MEV Problem
Among the proposed solutions is the use of Trusted Execution Environments (TEEs) to enforce bot behavior, which is already undergoing testing. Additionally, the idea of dark pools using zero-knowledge proofs put forward by former Binance CEO Changpeng Zhao could also help counter the MEV threat in the decentralized finance space.
The implementation of these innovations could turn MEV from a hidden drain into a source of sustainable revenue for blockchains, while lowering fees for everyday users.
