A Flash(bot) In The Pan: Measuring MEV in Private Pools

Thu 06Oct2022
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Christof Ferreira Torres, ETH Zürich

From 12.00 until 13.30

At CNB/F/110 (Lunch) + CAB G 52 (Seminar), ETH Zurich

CNB/F/110 (Lunch) + CAB G 52 (Seminar), ETH Zurich

Abstract:

The rise of Ethereum has lead to a flourishing decentralized marketplace that has, unfortunately, fallen victim to frontrunning and Maximal Extractable Value (MEV) activities, where savvy particpants game transaction orderings within a block for profit. One popular solution to address such behavior is Flashbots, a private pool with infrastructure and design goals aimed at eliminating the negative externalities associated with MEV. While Flashbots has established laudable goals to address MEV behavior, no evidence has been provided to show that these goals are achieved in practice. In our latest work, we measure the popularity of Flashbots and evaluate if it is meeting its chartered goals. We find that (1) Flashbots miners account for over 99.9% of the hashing power in the Ethereum network, (2) powerful miners are making more than 2x what they were making prior to using Flashbots, while non-miners’ slice of the pie has shrunk commensurately, (3) mining is just as centralized as it was prior to Flashbots with more than 90% of Flashbots blocks coming from just two miners, and (4) while more than 80% of MEV extraction in Ethereum is happening through Flashbots, 13.2% is coming from other private pools.

Join us in CNB/F/110 (Lunch) + CAB G 52 (Seminar).

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