🤖 AI Summary
This work addresses the problem of frontrunning and value extraction caused by Maximal Extractable Value (MEV) in distributed ledgers by proposing a defense mechanism based on Verifiable Delay Functions (VDFs). The approach introduces a mandatory time delay at the transaction generation stage, preventing block producers from instantaneously exploiting MEV opportunities without compromising system liveness. To the best of our knowledge, this is the first application of VDFs to MEV mitigation. The scheme is rigorously proven effective under both Byzantine and rational actor models, while its theoretical limitations are explicitly characterized. Empirical analysis demonstrates that the mechanism successfully blocks the majority of existing MEV attacks, offering a solution that is both theoretically sound and practically feasible.
📝 Abstract
Our work presents a defense mechanism against Maximal Extractable Value (MEV) opportunities in distributed ledgers. The mechanism relies on the idea of enforcing a verifiable delay when generating transactions, such that a block creator cannot react to the appearance of a MEV opportunity without breaking liveness. We present positive results both in the Byzantine setting and in a game theoretic model of rational participants. We additionally present negative bounds that outline the limitations of this line of defense. Finally, we explore real-world implementation details of verifiable delays and show that, based on historical MEV data, our mechanism could realistically help prevent most existing MEV threats.