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Commitments and privacy in the MEV supply chain

Robert Miller

Product Lead & Steward @ Flashbots

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This talk

  • Review the MEV supply chain
  • Talk about what MEV utopia and dystopia look like, and how to get to MEV utopia
  • Look at mev-boost as a case study
  • Review mev-share

Flashbots

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MEV Supply Chain

  • The MEV supply chain shows how a user’s transaction progresses before its included on-chain

Flashbots

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MEV Utopia

What we want:

  • Specialization
  • Maximum competition
  • No privileged actors

Wallet

Searcher

Builder

Validator

User

Wallet

Searcher

Builder

Validator

User

Wallet

Searcher

Builder

Validator

Block

Bundle

Transaction

$$$

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User

Intent

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Flashbots

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MEV Dystopia

“MEV MegaFund Blackbox”: Single or small group of entities vertically integrated end to end

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Why this is bad:

  • Censorship
  • Rent extraction
  • Opaque

User

MEV MegaFund Blackbox

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How do we get to MEV utopia?

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How do we get to MEV utopia?

By enabling trustless collaboration and �maximizing competition in the mev-supply chain

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What makes this hard? mev-boost case study

If validators can see builders’ blocks they can steal MEV or frontrun users

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Consequences:

  • Builders would only send blocks to trusted validators (e.g. large, well known)
  • Solo stakers would be unable to receive competitive MEV rewards

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Takeaway: Builders need privacy from validators!

Searcher

Searcher

Builder

Validator

Block

Flashbots

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mev-boost and privacy

Imagine builders only share block headers with validators.�

What are the challenges with this?

  • Builders can lie about their blocks (validity, profit)
  • Builders can withhold block bodies

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Takeaway: privacy alone isn’t enough, builders need to make commitments as well

Searcher

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Builder

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Block

Flashbots

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mev-boost

Relay

Relay

Relay

Relay

Relay

Relay

Builder

Builder

Builder

Relay

Block

Relay

Relay

Block body

Commit

Reveal

Validator

Validator

Signed block header

Validator

Block header and profit

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2.

3.

Flashbots

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How does mev-boost unbundle the MEV supply chain?

  • Privacy: Builders blocks are hidden until the block header is signed
  • Data revealing guarantees: Validators signing a block header reveals block bodies
  • Selective data sharing: Validators have enough data to know which header to sign
  • Commitments: Builders and validators use relays to commit to blocks

Permissionless: any builder can submit blocks; any validator can outsource blocks

Flashbots

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What is the next step to MEV utopia?

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What is the next step to MEV utopia?

Further unbundle the MEV supply chain, this time focused on orderflow and users

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Users create MEV.

Searchers capture the MEV users create.

Can we design a permissionless system that lets users capture MEV instead?

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Why can’t users and searchers collaborate?

  • Frontrunning: searchers can frontrun users
  • No bargaining power: users have no way to internalize their MEV
  • Payment enforcement: users have no way to enforce that they are paid a certain amount for their transactions

User

Searcher

Transaction

Flashbots

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mev-share

User

Matchmaker

Transaction

Matchmaker

Matchmaker

Bundle

+

validity condition

Searcher

Searcher

Partial bundles

Builder

Selective data sharing

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2.

3.

Flashbots

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How does mev-share unbundle the MEV supply chain?

  • Privacy: user transactions are hidden from searchers
  • Selective data sharing: users share select data to help searchers optimize
  • Commitments: user payments are enforced with bundle validity conditions

Permissionless: any user can submit transactions; any searchers can extract MEV

Flashbots

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MEV supply chain

Wallet

Searcher

Builder

Validator

User

Wallet

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Builder

Validator

User

Wallet

Searcher

Builder

Validator

Block

Bundle

Transaction

mev-boost

$$$

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User

Intent

$$$

mev-share

Flashbots

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Future MEV supply chain?

Wallet

Searcher

Builder

Validator

User

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User

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mev-share

mev-boost

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mev-build

???

$$$

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User

$$$

???

mev-intent

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Block

Bundle

Transaction

Intent

Flashbots

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Future MEV supply chain?

Wallet

Searcher

Builder

Validator

User

Wallet

Searcher

Builder

Validator

User

Wallet

Searcher

Builder

Validator

mev-share

mev-boost

???

mev-build

???

$$$

$$$

$$$

User

$$$

???

mev-intent

???

Block

Bundle

Transaction

Intent

Flashbots

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Towards a unified MEV supply chain infrastructure

  • Cooperation in the MEV supply chain breaks down without trust and privacy, leading to MEV Dystopia
  • We can use privacy and commitment devices in order to remove the need for trust between parties
  • At Flashbots we are building SUAVE: a decentralized platform for programmable privacy and credible commitments in the MEV supply chain

Flashbots