633 research outputs found
SoK: MEV Countermeasures: Theory and Practice
Blockchains offer strong security guarantees, but they cannot protect the
ordering of transactions. Powerful players, such as miners, sequencers, and
sophisticated bots, can reap significant profits by selectively including,
excluding, or re-ordering user transactions. Such profits are called
Miner/Maximal Extractable Value or MEV. MEV bears profound implications for
blockchain security and decentralization. While numerous countermeasures have
been proposed, there is no agreement on the best solution. Moreover, solutions
developed in academic literature differ quite drastically from what is widely
adopted by practitioners. For these reasons, this paper systematizes the
knowledge of the theory and practice of MEV countermeasures. The contribution
is twofold. First, we present a comprehensive taxonomy of 28 proposed MEV
countermeasures, covering four different technical directions. Secondly, we
empirically studied the most popular MEV- auction-based solution with rich
blockchain and mempool data. In addition to gaining insights into MEV auction
platforms' real-world operations, our study shed light on the prevalent
censorship by MEV auction platforms as a result of the recent OFAC sanction,
and its implication on blockchain properties
Using Blockchain Technology for The Organ Procurement and Transplant Network
The organ donation system in the United States is centralized and difficult to audit by the general public. This centralized approach may lead to data integrity issues in the future. The Organ Procurement and Transplant Network (OPTN) was built and maintained by a non-governmental organization called the United Network for Organ Sharing (UNOS) under its proprietary UNet(SM) umbrella platform. This platform is made up of proprietary closed source software and does not provide the general public easy access to the organ transplant data for auditing. This study investigates the feasibility, challenges, and advantages of a blockchain-based OPTN.
A prototype of a blockchain-based OPTN was created using the Hyperledger Fabric framework. The policies and guidelines issued by the United States Department of Health and Human Services for UNOS and the OPTN were used as the basis of this prototype. Four factors were identified to have a direct effect on the performance of this system, viz. max batch time out, max block size, endorsement policy, and transaction rate. Additionally, two variants of the blockchain chaincode were also developed. The first variant performed the organ-candidate matching inside the blockchain (Scheme A), and the second variant performed it outside the blockchain (Scheme B).
Analysis of these data showed that Scheme A outperformed Scheme B in all experiments for write-operations. However, the read operations remained unaffected by any of the experiment variables in the given environment.
Based on these results, it is recommended to perform the organ-candidate matching on the blockchain with the max batch time out close to the transaction rate
Threshold Encrypted Mempools: Limitations and Considerations
Encrypted mempools are a class of solutions aimed at preventing or reducing
negative externalities of MEV extraction using cryptographic privacy. Mempool
encryption aims to hide information related to pending transactions until a
block including the transactions is committed, targeting the prevention of
frontrunning and similar behaviour. Among the various methods of encryption,
threshold schemes are particularly interesting for the design of MEV mitigation
mechanisms, as their distributed nature and minimal hardware requirements
harmonize with a broader goal of decentralization.
This work looks beyond the formal and technical cryptographic aspects of
threshold encryption schemes to focus on the market and incentive implications
of implementing encrypted mempools as MEV mitigation techniques. In particular,
this paper argues that the deployment of such protocols without proper
consideration and understanding of market impact invites several undesired
outcomes, with the ultimate goal of stimulating further analysis of this class
of solutions outside of pure cryptograhic considerations. Included in the paper
is an overview of a series of problems, various candidate solutions in the form
of mempool encryption techniques with a focus on threshold encryption,
potential drawbacks to these solutions, and Osmosis as a case study. The paper
targets a broad audience and remains agnostic to blockchain design where
possible while drawing from mostly financial examples
CALYPSO: Private Data Management for Decentralized Ledgers
Distributed ledgers provide high availability and integrity, making them a key enabler for practical and secure computation of distributed workloads among mutually distrustful parties. Many practical applications also require strong confidentiality, however. This work enhances permissioned and permissionless blockchains with the ability to manage confidential data without forfeiting availability or decentralization. The proposed Calypso architecture addresses two orthogonal challenges confronting modern distributed ledgers: (a) enabling the auditable management of secrets and (b) protecting distributed computations against arbitrage attacks when their results depend on the ordering and secrecy of inputs.
Calypso introduces on-chain secrets, a novel abstraction that enforces atomic deposition of an auditable trace whenever users access confidential data. Calypso provides user-controlled consent management that ensures revocation atomicity and accountable anonymity. To enable permissionless deployment, we introduce an incentive scheme and provide users with the option to select their preferred trustees. We evaluated our Calypso prototype with a confidential document-sharing application and a decentralized lottery. Our benchmarks show that transaction-processing latency increases linearly in terms of security (number of trustees) and is in the range of 0.2 to 8 seconds for 16 to 128 trustees
Towards a Theory of Maximal Extractable Value II: Uncertainty
Maximal Extractable Value (MEV) is value extractable by temporary monopoly
power commonly found in decentralized systems. This extraction stems from a
lack of user privacy upon transaction submission and the ability of a
monopolist validator to reorder, add, and/or censor transactions. There are two
main directions to reduce MEV: reduce the flexibility of the miner to reorder
transactions by enforcing ordering rules and/or introduce a competitive market
for the right to reorder, add, and/or censor transactions. In this work, we
unify these approaches via \emph{uncertainty principles}, akin to those found
in harmonic analysis and physics. This provides a quantitative trade-off
between the freedom to reorder transactions and the complexity of an economic
payoff to a user in a decentralized network. This trade off is analogous to the
Nyquist-Shannon sampling theorem and demonstrates that sequencing rules in
blockchains need to be application specific. Our results suggest that neither
so-called fair ordering techniques nor economic mechanisms can individually
mitigate MEV for arbitrary payoff functions
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