arXiv
FairFlow Protocol: Equitable Maximal Extractable Value (MEV) mitigation in Ethereum
Dipankar Sarkar
This paper introduces FairFlow Protocol, a novel approach to mitigate Maximal Extractable Value (MEV) in Ethereum blockchain networks. MEV represents the maximum value that can be extracted from block production in excess of the standard block rewards and gas fees, often at the expense of regular users. Our protocol implements a fair ordering mechanism that reduces the impact of front-running and other MEV extraction techniques while maintaining network efficiency.
Abstract
We present FairFlow Protocol, a decentralized solution for MEV mitigation in Ethereum-based networks. The protocol introduces a transparent transaction ordering mechanism that ensures equitable treatment of transactions while preserving network performance. Our approach combines commit-reveal schemes with economic incentives to create a more democratic and fair blockchain environment. Experimental results demonstrate a significant reduction in MEV extraction opportunities without compromising block space efficiency or network throughput.
Key Findings
- Reduced MEV extraction opportunities by up to 60% in simulated environments
- Maintained block space efficiency within 95% of optimal utilization
- Decreased front-running incidents by implementing a fair transaction ordering mechanism
- Achieved consensus compatibility with existing Ethereum protocols
Impact
The FairFlow Protocol represents a significant step forward in creating more equitable blockchain networks. By reducing MEV extraction opportunities, we help protect users from value extraction while maintaining the essential properties of decentralized systems.
Frequently Asked Questions
What is FairFlow Protocol?
FairFlow Protocol is a novel approach to mitigate Maximal Extractable Value (MEV) in Ethereum blockchain networks. It implements a fair ordering mechanism that reduces the impact of front-running and other MEV extraction techniques while maintaining network efficiency. Published December 2023 on arXiv (2312.12654).
How does FairFlow Protocol reduce MEV?
FairFlow Protocol combines commit-reveal schemes with economic incentives to create a more democratic and fair blockchain environment. It introduces a transparent transaction ordering mechanism that ensures equitable treatment of transactions while preserving network performance. The protocol demonstrates a significant reduction in MEV extraction opportunities without compromising block space efficiency or network throughput.
Who is FairFlow Protocol for?
FairFlow is for Ethereum application developers and protocol designers concerned about MEV extraction at the expense of regular users. The protocol is relevant to: DEX builders, wallet developers, rollup teams, and any protocol that relies on fair transaction ordering. It is also relevant to MEV research and the Flashbots community.