Flashbots: Frontrunning the MEV crisis

[thegostep]

@jannikluhn

Love the MEV inspect dashboard. Do you plan to host a publicly available version for anyone to access?

Yes - we are currently working on infrastructure so that we can host the dashboard publicly. In the meantime, the data can be replicated by running the mev-inspect service.

@jannikluhn

Regarding MEV-Geth, could miners “steal” the MEV from searchers?

This question has come up a couple times on our discord too, I will consider updating the post with additional clarification on the game theory if this answer proves to be adequate.

You are right that in the mev-geth proof of concept, miners have full visibility of the bundles as they come in. Miners could, if they wanted to, steal the most profitable bundle for themselves. This is why Complete privacy has a big next to it.

Here is the game theory argument why they will not:

• it is possible for a searcher to identify if a miner is stealing his bundles by monitoring the chain
• it is possible for the searcher to withhold bundles from miners who he finds to be miss-behaving
• mev-geth bundle auctions are a repeated game between miners and searchers
• miners are incentivized to keep the game going in order to maximize long run profits

In addition, stealing bundles is a non-trivial engineering effort which I find unlikely miners will be interested in doing. It would require modifying mev-geth, implementing logic for generalized frontrunning, and taking on additional exchange risk from receiving payments in tokens rather than ether.

In summary, miners would only be incentivized to steal bundles if the revenue from that bundle outweighs the total expected future revenue from continuing the relationship with the searcher AND the risk adjusted cost of execution. I don’t expect this to be a sufficiently enticing proposition.

I expect miners who participate in the Flashbots proof of concept to use their reputation as a signal of trustworthiness, especially as some of them prepare to become staking pools for ETH2.

In the longer run, we hope to transition to a fully trustless solution as described in this section:

@thegostep

The MEV-Geth proof of concept relies on the fact that searchers can withhold bids from certain miners in order to disincentivize bad behavior like stealing a profitable strategy. We expect a complete privacy design to necessitate some sort of private computation solution like SGX, ZKP, or MPC to withhold the transaction content from miners until it is mined in a block. One of the core objective of the Flashbots organization is to incentivize and produce research in this direction.