3 - 5 minute read
A single Miner Extractable Value (MEV) relay transaction on the Ethereum Beacon Chain has rewarded Lido, the liquid staking solution, with a massive $1.28 million worth of 689 Ether (ETH). The MEV-boosted relay’s block number 17007842 was finalized on April 9, 2023, built by beaverbuild.org with 47 transactions, according to transaction data. This is one of the most significant rewards in recent months, with the closest match being Lido’s most recent high of 691 ETH on March 20.
The co-founder and CEO of Ethereum-based infrastructure platform Gnosis, Martin Köppelmann, was quick to urge users to explore services like MEVBlocker to shield their transactions from being exploited. He suggested that almost 90% of the MEV currently being paid to validators could go to users if all users or wallets use such services.
MEV bots have, to date, extracted more than $1.38 billion from Ethereum users trading, providing liquidity, and minting nonfungible tokens (NFTs). The culprit behind this centralized MEV-boost relay’s ability to extract value lies in aggregating blocks from various builders to select the ones with the highest fees. “Sandwich” attacks are the most common type of MEV exploit in which an attacker places a large trade on either side of a target’s transaction, manipulating the price and profiting from the price change.
Proposer-Builder Separation (PBS) is a concept from the Ethereum research organization, Flashbots, introduced in 2021 as Ethereum transitions to proof-of-stake in September in a bid to promote competition at the consensus level, decentralize the Ethereum network and strengthen censorship resistance. However, Ethereum has encountered several censorship issues stemming from compliance with standards laid down by the Office of Foreign Assets Control (OFAC), although the number of compliant blocks has fallen since the merge.
Bot (@mevproposerbot) April 9, 2023
There are currently ten active relays, with Flashbots responsible for relaying over 50% of the MEV-boost blocks since MEV was introduced in 2021, as per MEVBoost.org.
This event signals a worrying trend in crypto trading, where centralized relays extract a massive portion of trader’s profits, leaving minimal returns for validators. A user-friendly and secure transaction environment has become a vital concern for traders and investors, especially in the light of harsh censorship rules cropping up in some jurisdictions.
To combat transaction exploitation, traders are encouraged to use services like MEVBlocker to shield their transactions and ensure they receive fair payouts. The distributed nature of the blockchain infrastructure needs to be preserved by promoting decentralization and competition, thus ensuring that users and validators alike can reap the benefits of crypto trading.