Eigen Seminar | Privacy-Preserving Computing Completely Solve MEV?

This article will dive into MEV, and this ten to fifteen minute read will explain how to solve MEV from the technical perspective. It will be well worth your time. Enjoy.

MEV was proposed by Philip et al. in 2019 and later on attracted more and more attention. Simply speaking, MEV means the miners can obtain extra profits by including, rearranging, inserting or ignoring transactions in the blocks they produced.

It is common sense to us that MEV is the abbreviation of Miner Extractable Value. However, we have a new interpretation of MEV: Most Extractable Value due to blockchain’s development. This means not only the miners, but other participants engage in the “war” of MEV profit. These participants are arbitrage/liquidation bots. But one thing to emphasize, these bots don’t have the same rights as miners, like selecting transactions or packing them on the chain.

However, it is the front-running bots instead of miners that are gaining the most profits. The bots raise prices before users by increasing gas fees, which is unfriendly no matter in terms of participants or the blockchain.

What on earth are the underlying problems when MEV exists? There are mainly two parts: mempool transparency and re-ordering problems.

“First come , First served”. Sounds like a cliche. In the social sense, it involves personal quality, the overall quality level of society, fairness and justice and so on. Like queuing in our daily lives, all the transactions are going in order. But there is one thing different: The sequence does not depend on time but on the gas fees. Higher gas fee, higher priority? Definitely not! The miner has the right to re-order all transactions. For example, he can insert his own transaction in front of yours and execute it first. And even you don’t know if you’ve undergone a black-box operation. What’s more, even if you know, there’s nothing you can do, don’t you?

Here, let’s consider the profits. The front-running bots obtain tips. The miners make profits by reordering. But how about us? As for the general public, there is nothing we can do but lose profits! It really hurts to think of it!

Can we eradicate MEV completely?

Two mainstream attitudes over this problem:

One is that MEV cannot be avoided. We can only reduce the income of profit takers and share it with the public, which we call “sharing type”;

The second is that MEV can be erased from the source of the transaction, which we call the “elimination type”.

[Sharing Type]

This solution claims that users need to strengthen their understanding of MEV and divide the profits by using various tools. The typical solution is Flashbot.

Flashbots are an open-source research and development organization. They focus on building a variety of tools that assist in bringing the power to analyze and extract MEV to everyone. By definition, MEV exists in places where there is high complexity which requires significant knowledge of smart contracts to understand.

Flashbots work reducing this complexity by working on three fronts:

  1. Provide tools to inspect and quantize the impact of MEV — This helps reduce the information asymmetry and people can understand the problem and its impact better. (MEV-Inspect)
  2. Democratize the extraction of MEV — The power to extract MEV exists in the hands of few people so they provide tools for everyone to start extracting MEV. (MEV-Geth)
  3. Distribute the benefit of MEV — Currently, the miners and validators extract a disproportionate amount of benefits. So it’s important to redistribute these to all the participants.

[Elimination Type]

The emergence of MEV reflects that miners, as a privileged class, use the privilege of the block to seek power rent. The sharing type believes that MEV is inevitable, so it embraces MEV to solve the existing problems. The elimination type is different. It committed to the study of minimizing and even eliminating the space of power rent-seeking. Under this scheme, the new sequencer makes the miners lose the right of “God’s hand”. For example, the privacy middleware Automata scheme: Automata provides middleware to encrypt the transaction queue and generate a unique signature according to the current transaction queue. In this case, the miner cannot insert a new transaction into the transaction queue. Otherwise, the signature will change. At this time, Dex can recognize the change of signature when receiving the transaction queue and reject the transaction.

In addition, there is a solution for privacy-preserving computing networks, which believes that MEV can be fundamentally solved.

Secret Network solves these problems by giving privacy to smart contracts or secret contracts. The platform based on Secret Networks can encrypt all transaction information to provide complete privacy.

Both Secret Network and KeeperDAO are committed to eradicating MEV.


Eigen adopts the second solution. EigenNetwork privacy-preserving computing network solves MEV from both fair-sequencer and privacy mempool.

On the one hand, Eigen Rollup uses a fair algorithm to realize the fair-sequencer. The sequencer does not execute transactions, and thus, it does not have the motivation to reorder the sequence. What if the sequencer and the transaction verification node do evil together? Don’t worry. EigenNetwork has another method to deal with it. Eigen places the sequencer inside the Eigen CC(Eigen Confidential Computing)set. Eigen CC is composed of nodes with TEE (Trusted Execution Environment), which ensures that the sequencer cannot reorder transactions or cooperate with verifiers to cheat, thus fundamentally reducing the risk of MEV.

On the other hand, the Eigen privacy-preserving computing network supports users in encrypting the transaction before broadcasting, so miners can’t see the transaction details. In this case, miners can’t determine which sorting method will benefit the most. This is what EigenSecret intends to achieve.

EigenSecret is a cross-chain bridge/wallet with privacy -preserving property. All transaction information on EigenSecret, such as transaction input, output, trader information, data on the chain and other information, will be protected through Eigen. In Eigen Rollup, transactions are packaged through a fair sequencer and executed by miners. Miners cannot reorder transactions in Layer2 during privacy calculation, so Eigen completely reduces the impact of malicious MEV and PGA.

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