Cost of Feudalism: Towards a Theory of MEV

Cryptoecon

Talk 5 — On Top of the Mountain, Floor 5

1140

Cost of Feudalism: Towards a Theory of MEV

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Cryptoeconomics

Day 2Wed, Oct 1215:30 - 16:0030 Mins

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Maximal Extractable Value (MEV) is excess value captured by miners/validator. This excess value often comes from reordering, censoring, or inserting new transactions that allow a miner to front-run users' transactions. Is MEV *always* bad? Can it sometimes lead to good equilibria for users? We modify tools from algorithmic game theory and probability to prove some surprising paradoxes — *some* MEV improves trading efficiency in networks of automated market makers.

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