Top Ethereum Teams Join Forces To Return MEV Profits To Users
Free MEV Blocker RPC “Pays Users To Protect Themselves”
By: Samuel Haig •DeFi News
More than 30 teams representing the Ethereum ecosystem have joined forces to combat Maximal Extractable Value, on-chain arbitrage techniques that quietly siphon hundreds of millions of dollars from users’ trades.
On Wednesday, the consortium launched MEV Blocker, software designed to redistribute 90% of the profits from MEV capture back to ordinary Ethereum users.
“When DeFi users make trades…, their transactions are at risk of being hijacked by MEV bots – resulting in significantly worse prices for the users,” MEV Blocker said.
MEV Blocker submits transactions to a private network of searchers – network participants that monitor Ethereum’s mempool for profitable MEV opportunities and run bots to execute them – who compete for MEV on the condition that they share profits with Ethereum users.
“MEV Blocker is a free RPC endpoint that *pays users* to protect themselves from MEV across a wide variety of use cases in DeFi, NFTs, and dApps,” tweeted CoW Swap.
The software redistributes 90% of the profits generated back to users, with searchers claiming the remaining 10%. It was developed by CoW Swap in partnership with Agnostic Relay and Beaver Build. Other launch partners include Balancer, Gnosis, 1inch, and Shapeshift.
The Dark Forest of MEV
MEV bot operators, or “searchers,” use arbitrage techniques such as transaction front-running, reordering, or sandwiching to extract profits when users submit transactions to Ethereum’s public mempool.
The strategy is particularly lucrative when targeting DEX trades but results in on-chain traders paying the worst possible price for transactions.
Flashbots, an MEV research team, estimates ordinary Ethereum users lost more than $617M to MEV since the start of 2021, with searchers raking in $5.1M over just the past month.
Ethereum Validator Slashed For Attacking MEV Bot
The launch comes just days after an Ethereum validator stole $25M in a malicious attack targeting an MEV searcher.
The validator funded their node using Aztec’s confidential transfer feature roughly three weeks earlier. OtterSec, a blockchain security firm, concluded the validator’s decision to hide the origin of their funds suggests they planned the attack prior to launching a node.
“Now, MEV extractors will have to wonder, ‘is this validator malicious?’” tweeted Hudson Jameson, an Ethereum developer who previously worked for Flashbots. “There was an assumption, up to this point, that validators would not interfere with bundles.”
The Ethereum network slashed the malicious validator for proposing conflicting blocks the next day. However, Mudit Gupta, CISO at Polygon, slammed the initial slashing penalty imposed on the validator as being too lenient.
“The initial slashing penalty is 1 ETH,” Gupta tweeted. “25,000,000 profit for 1,800 penalty? Sure, I’ll take that trade. The economic incentives are broken here…”