<Idea> MEV For All Validators on BNB Chain

DcKingT · March 17, 2023, 10:51am

To ensure further decentralization and allowing BNB Chain to grow better organically, there is a need to allow MEV to flourish amongst validators. A balanced and inclusive DeFi ecosystem promotes the right MEV behaviors.

Thanks bloXroute for the earlier highlight.

github.com/bnb-chain/BEPs

MEV on BSC - where we are and where we should go

opened 06:04PM - 13 Dec 22 UTC

xcarlo

X-bep-track

Recently, several validators began to quietly capture MEV. This development was… predictable, but has some negative effects: 1. Unfairness - it's unfair that some validators make more $ by extracting MEV, while others do not. Whatever decision the BSC community reaches regarding MEV - it should be fair for all validators. 2. Centralization - MEV validators yield higher APY, causing stakers to abandon other validators and concentrate the stake with the best MEV-extracting validator. Any MEV solution should allow all validators to capture similar yield to avoid it. 3. Half-measure is the worst of all worlds. It's fine if validators don't capture MEV, and it's potentially fine if they do. But if some of the validators extract MEV while others don't, it's bad for the traders who lose trades, and bad for MEV searchers who can only capture a fraction of the opportunity. 4. No clear standards. Right now each actor acts independently without synchronization. Having clear guidance from the BSC community and foundation would allow any solution/approach (no matter what it is) to be utilized effectively across the ecosystem to everyone's benefit. The problem of centralization is so significant, that on ETH it drove the adoption of MEV-boost, which allows 3rd-party block-builders to suggest blocks which capture MEV. The rational is something like: if a vanilla solo-validator yields 4% APY, and a large validator can invest in capturing MEV and yield 7% APY, everyone will stake with the 7% MEV validator. We would like to explore potential MEV solutions to the BSC ecosystem, balancing between: - Validator yield - Decentralization - DeFi user experience [bloXroute](https://bloxroute.com/) will be glad to explore, collaborate, implement, and/or maintain a MEV solution which best fits the BSC community. Such potential solutions include: 1. MEV-boost-like solution, allowing specialized MEV actors the suggest the most valuable blocks to any validator 2. Implementing [Themis](https://twitter.com/_mahimna/status/1460705728877010951) - a fair-ordering solution suggested by Cornell / Chainlink - which eliminates MEV and include Tx according to the order they were received by all validators (MEV minimization) 3. Enabling validators to back-run / capture arb, but preventing front-running / sandwiching which is the most harmful for users (only "good MEV") 4. MEV-geth-like solution, allowing Searchers to provide bundles and private Tx to validators, but not full blocks 5. Incentivizing searchers to maintain an open-source code which allows validators to capture MEV locally 6. Back-running MEV auctions which allow validators to back-run, but prevents front-running or a combination of the above. This post doesn't offer a solution - rather, it's an invitation to collaborate and explore which MEV approach would serve the BSC ecosystem best and get it done fast. As a service provider for some of the largest DeFi traders in the world, and as key actor in multiple alternative MEV ecosystems on different chains, we would be glad to do our part and contribute to the BSC ecosystem.

To put it simply now the situation now on BSC -

Only few validators are capable or doing MEV extraction.
MEV captured results in higher APY which encourages delegation to certain validators, resulting in centralization.
BSC community are unsure whether to push ahead with MEV; some validators lack technical expertise to extract MEV.
Cost of running a validator could be high without MEV to improve profitability.

If BNB Chain is to remain credible as a PoS chain, it has to allow MEV to flourish across BSC. There is a need for the BSC community to come together and share knowledge on MEV solutions. The possibility of collaboration with reliable 3rd party services should be considered and verified. For a chain like BNB Chain to stay competitive, sustainable and equitable, MEV extraction is an unavoidable development component.

ben_nodereal · March 20, 2023, 6:59am

In Ethereum, MEV is very mature mechanism and services to protect the users and introduce more revenues for the validators. At the same time, several critical providers like Flashbots/BloxRoutes are providing very solid service now. https://mevboost.pics/
Based on the report of MEV Outlook 2023 | Research | EigenPhi, I believe, it is necessary to work with top players in ethereum to introduce MEV soon.

Topic		Replies	Views
BEP (Idea): Proposal for Integrating MEV within BNB Smart Chain BEP	1	1372	May 1, 2023
Discussion on MEV On BSC BNB Smart Chain	0	695	December 12, 2023
MEV: Implementation Principles within BSC (For Discussion Purpose) BEP	7	3449	July 16, 2023
Tech Community Call #2 Community Tech Call MOM	1	1024	March 31, 2023
BEP(Idea): Encouraging BSC Validators to Join BNB Beacon Chain for Increased Shared Security and Decentralisation BEP consensus	5	1113	March 22, 2023

<Idea> MEV For All Validators on BNB Chain

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