Ethereum developer Justin Drake introduced a mechanism for smoothing and redistributing MEV spikes through burning as part of the concept of “separating the proposer and the creator of the block” (PBS).
MEV burn is the natural continuation of EIP-1559
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— Justin Rake 🦇🔊 (@drakefjustin) May 15, 2023
In July 2022, Ethereum co-founder Vitalik Buterin named the introduction of PBS as one of the most significant future changes to the network.
It is assumed that the division of roles between validators will allow to reconfigure the economics of extracting MEV and promote the introduction of sharding to dramatically increase network throughput.
However, according to Ethereum researchers, although the development of the upgrade is at an “advanced stage”, prototypes in clients are expected in a year or more.
The developers stated that their MEV incineration solution is a simple add-on to PBS and will bring safety benefits as well as economic benefits similar to EIP-1559.
In the standard PBS-based MEV extraction path, they proposed adding a base payload fee to the block-proposing validator’s bid, which burns anyway. For creators in the offer confirmation phase, there is a time frame for setting a lower fee cap. As a result, offerers choose winning bids, maximizing rewards.
In non-burning MEV distribution mechanisms, the created units with the highest balance gain the advantage. This leads to centralization, giving advantage to large players. The solution proposed by the developers reduces the requirements for the capitalization of the validator.
The researchers believe that smoothing MEV peaks will improve network security by improving macro consensus stability and censorship resistance.
Recall that in April, more than 30 Ethereum projects came together to launch the MEV Blocker tool, designed to protect users from front-running and “sandwich attacks” within the MEV.
The Flashbots organization has unveiled a beta version of the MEV-Share protocol, which distributes “maximum recoverable value” among users.
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