{"id":734,"date":"2022-04-15T17:37:09","date_gmt":"2022-04-15T17:37:09","guid":{"rendered":"https:\/\/grandpascrypto.com\/?p=734"},"modified":"2022-04-15T17:37:11","modified_gmt":"2022-04-15T17:37:11","slug":"osmosis-a-novel-solution-to-the-mev-problem","status":"publish","type":"post","link":"https:\/\/grandpascrypto.com\/osmosis-a-novel-solution-to-the-mev-problem\/","title":{"rendered":"Osmosis: A novel solution to the MEV problem"},"content":{"rendered":"\n

tl;dr Summary:<\/strong> The Maximal or Miner extractable value (MEV) problem in which miners falsify transactions has ballooned in the last year, which some call an existential crisis for Ethereum. A potential solution is currently under development in the Cosmos layer-1 ecosystem.<\/em><\/p>\n\n\n\n

What is MEV?<\/h3>\n\n\n\n

MEV refers to the maximum reward or value that a miner (or a validator in proof-of-stake) can extract from the process of creating blocks by including, excluding, or changing the order of transactions in a block. This value is over and above the standard block reward and gas fee the miner receives.<\/p>\n\n\n\n

Let us take an example to unpack this.<\/p>\n\n\n\n

Tony wants to send some tokens to Bob. The transaction first goes to the node to which Tony is connected. From there it gets added to a collection of transactions called the \u2018mempool.\u2019 Miners and validators, who have access to the mempool, then take a bunch of transactions, order them and create a block that gets added to the blockchain. <\/p>\n\n\n\n

A miner with the help of searchers (programs that run complex algorithms on blockchain data to detect profitable MEV opportunities) can find a profitable transaction in this mempool and add a copy of the same transaction at the top of the list, for financial gains. <\/p>\n\n\n\n

For example, if Tony finds a lucrative arbitrage opportunity, a miner can create a fake copy of his transaction but with their own address and put that before Tony’s transaction in the block.<\/p>\n\n\n\n

This may sound wrong but in reality, this is how financial markets have always worked. For decades traders have used various methods to game the system in order to find profitable trades. This is also the case with blockchain and decentralized finance as it relies on economically rational actors to ensure the usefulness and stability of their protocols.\u00a0<\/p>\n\n\n\n

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MEV & Front running. How @Cosmos<\/a> & @osmosiszone<\/a> solves it:

Etherium have many adversary systems & is riddled with imperfections, ranging from high gas fees, exploits, congestion, to MEV, where the user is constantly front ran by VC's, founders, devs, arbitrage bots etc. \ud83e\uddf5\ud83d\udc47<\/p>— Artemis.red \u269b\ufe0f (@Artemis_js) January 17, 2022<\/a><\/blockquote>