Despite its potential as the foundation of a decentralized internet, blockchain faces a multitude of challenges, including scalability, energy consumption, regulatory uncertainty and the lack of interoperability., where block producers manipulate transaction orders to maximize profits, potentially sidelining smaller participants and resulting in a more centralized network.
These vulnerabilities not only compromise the robustness of blockchain networks but also erode the fundamental principles that underpin digital ledgers, leaving the system vulnerable to censorship. To counter MEV’s adverse effects, the blockchain community explores various solutions. The community suggests mechanisms to boost transaction confidentiality, hiding details until confirmation. There are even suggestions to change consensus mechanisms to reduce the advantage of front runners.
For example, when a trader uses a Shutterized protocol/rollup, the attacker cannot determine whether the transaction is a buy or sell, which tokens are exchanged, or at what price. Although it is not possible to reveal information securely to the chain as a standard, it is feasible to safely reveal information to the chain by encrypting the memory pool.
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