Conclusion
As cryptography progresses, MEV mitigation at the protocol level is likely. There will be a progression of implementing consensus changes like SSLE, VDFs, Single slot finality and zero knowledge Ethereum Virtual Machine. Changes that require social consensus like PBS will need strong support. The most promising solution at the consensus level is likely committee-based MEV smoothing.
MEV smoothing could force the community to have more conversations around what types of MEV are acceptable. In a PBS world, the proposer will be incentivized to accept the maximum bid from a builder. In an MEV smoothing world, the proposer does not have that incentive, as they are accepting the bid for all participating validators. This could lead to discussion around whether blocks should contain sandwich attacks or other types of user-extracting MEV. Should builder bids, representing the MEV extracted, be burned? A clear benefit is the formation of social consensus around MEV.
MEV will exist in some form. Acknowledging MEV now while the market is still evolving at the infrastructure and application layers is critical. Existential risks like a centralized block production supply chain lurk but can be avoided by raising awareness of cross-domain MEV and testing mitigation strategies in production. Ethereum roll-ups will provide a robust testing ground. The question becomes what tradeoffs are you willing to make and how fast can you execute?
We believe awareness and understanding of this topic is critical for any market participant looking to build blockchain-based solutions or transact on public blockchains. Ultimately, composable blockchains that prioritize mitigating the negative externalities of MEV will reduce existential risk for their own chains, contribute to broader cross-domain MEV protection and provide anti-fragile, censorship resistant public blockchains that mass adoption can more safely take place on.
Summary
Awareness and understanding of this topic is critical for any market participant looking to build blockchain-based solutions or transact on public blockchains. Ultimately, composable blockchains that prioritize mitigating the negative externalities of MEV will reduce existential risk for their own chains; contribute to broader cross-domain MEV protection; and provide anti-fragile, censorship-resistant public blockchains that mass adoption can more safely take place on.
