MEV for AI people
@phildaian
In this talk
mev
The Hydra�“Flaws of Decentralization on 0x and Etherdelta”
Ordering (OO) Fees
The Hydra : Into the Rabbithole
“Flaws of Decentralization”
Issue: exposure to arbitrage, miner frontrunning, exchange abuse
Found $1M/y profit running our own bot. Pre-PGA MEV bot!
Ordering Fees: One Puzzle Piece
Flash Boys 2.0 (a warning)
“MEV”, “PGA”s - beyond ordering
fair ordering: Themis and more (Kelkar et al)
Flash Boys 2.0
Enter MEV
OO fees represent one case of a more general quantifiable value we call miner-extractable value (MEV).
MEV refers to the total amount of Ether miners can extract from manipulation of transactions within a given timeframe, which may include multiple blocks’ worth of transactions.
mev
Clockwork Finance: A New Definition
MEV: the amount a miner can increase their balance across a series of blocks
Flashbots
mev: wat do?
… and many other projects
mev wat do?
MEV is fundamental
wat do?
DAPP DEVELOPERS: Limit MEV to what is strictly required/inherent. Think carefully about MEV.
USERS: Demand the above. Don’t use dapps with predatory MEV. Understand what MEV means to you.
L1/L2: Redesign with MEV in mind. Think about the use cases you are designing for, and how best to manage MEV. ��VALIDATORS: Extract, extract, extract, and don’t be ashamed. Your continued extraction is required to the game-theoretic security of any network on which MEV exists.��Everyone else: mitigate 👏 negative 👏 externalities.
… the birth of the magic bot
> illuminate the dark forest�
> democratize MEV extraction��> distribute MEV benefits
end mev begin ai
blockchain
blockchain
blockchain
blockchain
Blockchains are sufficiently sophisticated, sufficiently autonomous, and sufficiently abstracted from humanity to constitute their own “AI”s
… but why is this hyper rationalist weird metasystem better than my favorite LLM?
- there is no alignment without aligned incentives
- necessary but not sufficient
- crypto as ad-hoc alignment of the unaligned
- gives hope for AI alignment
- researching this further is already helping AI alignment
- privacy and decentralization of resources is essential to MEV alignment
- AI researchers should study programmable privacy and decentralization more explicitly
blockchain
Value == information == leverage�Cryptography allows for (some) boundaries
- cross-domain MEV alignment implies world alignment
implies AI alignment
- decentralization is necessary for cross-domain alignment
blockchain
blockchain
crypto allows for sandboxed experimentation with the real world
- can validate toy models, run alignment experiments with
no a-priori modeling, and more
- incentives require real-world validation; crypto provides
the API