Author: Frank, PANews

In the field of blockchain, MEV (Maximum Extractable Value) has always been a complex and significant issue. It refers to the phenomenon where miners or validators manipulate the order, insertion, or deletion of transactions in a block to extract additional profits. Common MEV tactics include sandwich attacks, front-running, and liquidation arbitrage.

MEV manifests differently on different public chains, from the common arbitrage trading on Ethereum to the severe sandwich attacks on Solana, and the gradually emerging MEV potential on Bitcoin, BSC, Tron, and other public chains. This article will take stock of the MEV phenomena on major public chains, analyze their different implementation paths, and their potential impact on users and networks.

Ethereum: Arbitrage is the main focus as sandwich attacks decline

As the public chain with the highest trading volume, Ethereum has always been the most concentrated public chain for MEV phenomena, especially during periods of active DeFi and NFT trading. In 2023, the Ethereum Foundation suffered a $9,101 loss from an MEV Bot sandwich attack when selling ETH, with the MEV Bot making a profit of approximately $4,060.

For ordinary users, MEV mostly brings negative impacts, especially when sandwich attacks and front-running transactions become rampant. However, for miners or validators, MEV is an undeniable additional source of income, especially during periods of declining block rewards. MEV income can supplement the income levels of miners and validators, which has a certain positive significance for maintaining the stability and decentralization of the entire blockchain network.

In the classification of MEV, in addition to harmful transactions such as sandwich attacks and front-running transactions that directly harm user interests, liquidation arbitrage and other behaviors are generally not considered harmful trading behaviors for maintaining market liquidity. Therefore, how to reduce harmful sandwich attacks and retain liquidation and arbitrage MEV becomes a difficult problem for maintaining MEV balance.

To address the fairness issue brought by MEV while balancing the income of validators, Flashbots has introduced the MEV-Boost and Flashbots Protect protocols. MEV-Boost is a relay system that allows validators to obtain optimized blocks from external block builders through relay nodes, maximizing the revenue from transaction ordering through complex MEV extraction strategies. MEV-Boost introduces a transparent block construction process, avoiding traditional malicious MEV tactics such as front-running and sandwich attacks.

Flashbots Protect is mainly designed for ordinary users, aiming to protect users' transactions from the impact of front-running and sandwich attacks. Through Flashbots Protect, users can submit private transactions, which will not be publicly broadcast to Ethereum's public mempool, but will be directly sent to miners or validators supporting Flashbots through a private channel.

Historically, the proportion of privacy orders transmitted through MEV-Boost or Flashbots Protect protocols on Ethereum has been around 30%, while the proportion of orders transmitted through the public mempool remains around 70%. This means that a large number of users do not prefer to initiate transactions using Flashbots Protect. However, about 70% of transactions on Ethereum DEX are initiated through Flashbots Protect's private orders. Currently, the proportion of MEV income on Ethereum is about 26%, indicating that the main source of income for validators is still block rewards, rather than relying solely on MEV income.

Currently, the number of validators registered with MEV-Boost on Ethereum has reached 1.47 million, accounting for over 81%. Data from September 5th shows that the proportion of blocks generated through the MEV-Boost protocol in the past 14 days reached 89%. However, this does not mean that 89% of Ethereum orders are all MEV orders transmitted through the private pool.

Currently, it seems that sandwich attacks on Ethereum have been significantly mitigated. According to Eigenphi data, the total income from sandwich attacks in the past 30 days was $740,000, while arbitrage income during the same period was as high as $1.72 million.

Solana: MEV issues intensify, sandwich attacks threaten user transaction security

MEV issues on Solana have become increasingly severe during this bull market cycle. According to Blockworks Research, in April 2024, MEV income on Solana surpassed that of Ethereum. Before November 2023, MEV income on Solana was almost negligible.

Compared to Ethereum, the reason why MEV on Solana is more discussed in the community is that its sandwich attacks have severely affected ordinary users' transactions. Previously, PANews conducted in-depth research on this topic, where a sandwich attack robot with an address starting with "arsc" made $30 million in just 2 months, compared to Uniswap's income of only $31 million in nearly a month. (Related reading: Earning $30 million in 2 months, Solana's largest sandwich attacker makes $570,000 a day, sparking public outrage)

Regarding MEV on Solana, it is necessary to mention Jito Labs, which developed Jito-Solana on Solana, which can be considered as a Solana version of MEV-Boost. Although the implementation paths of the two are different, the overall idea is similar, aiming to help validators maximize MEV income. Jito has introduced a block space auction mechanism, allowing transaction initiators to pay a separate fee to validators to ensure that bundled transactions are executed with priority. In addition, in March, Jito announced the temporary closure of its running mempool to reduce sandwich attacks, as this memory pool could be used by sandwich attackers to monitor the content of transactions initiated by users, but MEV robots can still listen to transactions by running an RPC node.

Therefore, the closure of Jito's mempool did not eliminate sandwich attacks on Solana, but only raised the threshold. Teams specifically seeking to profit from sandwich attacks have become even more cunning under community scrutiny.

According to PANews observations, the notorious "arsc" robot has not stopped, but continues to conduct sandwich attacks in a disguised manner, and the scale of the attacks is even larger than before, almost monopolizing sandwich attacks on Solana. "sandwiched" is a platform developed by the Ghost team specifically to monitor Solana's sandwich attacks. PANews carefully observed that the actual control addresses of the active sandwich attack programs on Solana are all "arsc". In simple terms, "arsc" has written the logic used for sandwich attacks into multiple smart contracts, with hundreds to thousands of addresses deployed on each contract to execute attacks. Therefore, if only tracking addresses, the correlation cannot be seen. Rough observations show that there are an average of several hundred to about a thousand addresses under each smart contract, so "arsc" may have tens of thousands of addresses used for sandwich attacks.

In the past year, Tips income (MEV fees) received on Jito has exceeded 1.53 million SOL (worth about $198 million), while Ethereum's MEV income during the same period was about $600 million.

BSC: Introducing MEV solutions similar to Flashbots, with arbitrage as the main focus

BSC and Ethereum have many similarities in the MEV extraction mechanism, and BSC has also introduced a MEV solution similar to Flashbots. On BSC, the bloXroute MEV Relay is used. This solution protects user transactions from being targeted by MEV robots in the public mempool by using private transaction bundles, thereby reducing user losses.

However, from the data perspective, the overall MEV profit on BSC is much higher than on Ethereum. According to Eigenphi, the total MEV income on the BSC chain in the past 30 days is approximately $133 million, with arbitrage income accounting for about $130 million and sandwich attack income only $2.8 million. On August 22nd, the arbitrage income reached $30 million, which seems somewhat unusual. The total transaction volume on the entire BSC chain in August was only $20 billion, so the high MEV income data is indeed questionable.

Ethereum L2: MEV has not yet formed on a large scale, with liquidation income as the main focus

There is currently almost no specific data on MEV on Ethereum Layer2 on data platforms. According to a research paper by Arthur Bagourd and Luca Georges Francois, as of June 2023, the MEV income on Ethereum L2 (Polygon, Arbitrum, Optimism) is approximately $213 million. Polygon contributes the highest proportion, at about $213 million, mainly due to a few large transactions increasing the overall profit. Arbitrum's total MEV extraction profit is about $250,000, and Optimism's data is about $250,000. Overall, excluding extreme data, MEV on Ethereum L2 has not yet formed a large-scale stable income, mainly due to the significant fluctuations in transaction volume on Ethereum L2. In addition, MEV income on Ethereum L2 mainly comes from liquidation income rather than sandwich attacks. Recently, Arbitrum passed a transaction sorting mechanism called Timeboost, a relay system similar to MEV-Boost.

Tron: Limited MEV opportunities under the DPoS mechanism

As one of the largest public chains in terms of transaction volume, Tron has recently seen increased trading volume due to the hype around MEME coin. However, many users have pointed out the existence of a large number of robot attacks on Tron. Subsequently, Tron founder Justin Sun stated that Tron does not have an MEV mechanism, and the current robot attacks are probabilistic attacks.

Tron uses the DPoS (Delegated Proof of Stake) consensus mechanism, under which there is usually no public mempool similar to traditional PoW and PoS. In the DPoS system, transactions are not first broadcast to public network nodes for miners or validators to select. Instead, transactions are submitted by users to Super Representatives (SRs) or delegated nodes, which have the authority to generate blocks and confirm transactions. Unless these Super Representatives actively participate in MEV transactions, the probability of MEV occurring is generally low.

Bitcoin: MEV gradually emerging, mainly relying on script and miner behavior

Due to the different design of Bitcoin compared to Ethereum, using a simple UTXO model, each transaction mainly involves the transfer of Bitcoin between the sender and receiver, so transaction ordering does not lead to complex arbitrage or liquidation opportunities as in Ethereum. In addition, the Bitcoin network does not have complex smart contracts, which means that miners cannot use arbitrage or liquidation to extract MEV as they can on Ethereum.

However, with the emergence of script, runes, Layer 2, and other Bitcoin ecosystem developments, the potential for MEV on Bitcoin is also emerging. Of course, for miners, more MEV opportunities will compensate for the reduction in mining rewards. However, as the Bitcoin protocol evolves, MEV has also become a challenge that needs to be addressed in the Bitcoin ecosystem. However, since MEV behavior in the Bitcoin ecosystem has not yet formed on a large scale and standardized pattern, relevant data has not been seen for the time being.

Overall, MEV manifests differently on various public chains, from the mature arbitrage mechanism on Ethereum to the rampant sandwich attacks on Solana. Each ecosystem faces unique challenges and opportunities. As DeFi, NFT, and smart contract technologies continue to evolve, the MEV phenomenon will continue to develop, and different public chains will constantly explore solutions to balance MEV income and user experience. In the future, effectively managing MEV will become an important issue for maintaining decentralization and network fairness in public chains.

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