A New Decade of Ethereum MEV Growth: From PBS to SUAVE
Flashbots has proposed SUAVE, an EVM-compatible Blockchain, in order to get as much order flow possible. SUAVE is a unified sorting layer that can be used on multiple chains. It aims to eliminate the centralization problem for builders.
The infrastructure is evolving from a centralized, general-purpose layer into a more professional layer. Functional modularization and specialization have made it possible to say that the whole is more than the sum of its parts.
PBS has shifted to SUAVE to continue bringing in diversity and making sure that the playing conditions are fair.
We refer to the new decade of MEV as competition, not amonopoly; sharing, and not exclusive; cogovernance, but dictatorship.
What do we have now? It has been almost half a year since Ethereum was merged. We have a fairly definite MEV supply chain with the corresponding workflow. This workflow basically does “integration”. The wallet integrates user transactions, the searcher incorporates arbitrage opportunities and the builder integrates order flow. The entire process is highly specialized, starting with a transaction issued from one user and ending with a validator proposing a block. There was no direct communication between miners and MEV searchers at that time. The searchers had to pay a higher gas fee to get the transaction included. This causes network congestion and fluctuating gas fees, which can lead to negative externalities on Ethereum’s network. Flashbots Auction, which is based on the auction mechanism, creates a communication channel between miners, and searchers. The auction mechanism creates a communication channel between miners and searchers. The PBS proposal was made. This means that both large-scale verification pool and individual verifiers can capture MEV more efficiently than individual validators. This will eventually lead to the centralization of the Ethereum validator set. It is easy to forget that the current builder role remains highly centralized. Only 4 builders have built 79.1% of MEVBoost blocks in the last 14 days. We don’t want to see centralization, especially in the case block construction as the core infrastructure. Order flow is the main means of production in block construction. The more you can express MEV, the more order you get. The network effect of OF’s dominant side is obvious. If a builder can’t grasp enough order flow, it doesn’t matter how clever the strategy. They have more opportunities to express MEV which means they are more likely build the most valuable block. However, if the OF disadvantaged party fails the block, they can submit the order to their Orderflow owner. The transaction has also been slow. These Owners will eventually switch to Builders that can confirm transactions faster after a while. The gap between the two sides will grow rapidly and the disadvantaged party may have to withdraw from competition. According to Rated statistics, 529.633 addresses that were built by builder0x69 in less than 14 days are not in blocks created by other builders. This means that 32.7% of the addresses are exclusive to them. It can be seen that EOF has already occupied a large proportion among the top builders.Cross-domain MEVCross-domain MEV is another problem leading to builder centralization.The background of cross-domain MEV is directly related to the Ethereum Rollup-centric Roadmap proposed by Vitalik. The Rollups will carry most of the Ethereum L1 activities, while the Ethereum main chain will serve as the DA/security base layer. Flashbots suggested SUAVE to address the above problems. SUAVE, an EVM-compatible Blockchain, is a common Mempool for all blockchains and a decentralized ordering layer. More specifically, it needs to solve the above two problems of EOF and cross-domain MEV at the same time.SUAVE can be disassembled into the following three components:Preference Environment
A preference environment is a cross-domain MEV. Preferences can be simple transactions within a single domain or complex sequences of events that span multiple domains. Preference environments can solve cross-domain MEV problems. They can be used to facilitate simple transactions on a single domain or complex sequences of events across multiple domains. Multi-chain builders will have greater advantages than single-chain builder in cross-domain MEVs. This is because they can see more MEV opportunities and can capture them more quickly. The preference environment is similar to placing user preferences from multiple chains on the same layer. This eliminates the information gap advantage.
The execution market corresponds with EOF. Users can have different preferences, such as builders, RPC service providers, wallets, and so on. Second, each user’s transaction generates MEV. Third, executors compete to satisfy the user. If the goal is to provide the best execution, the price will reflect the competition and, finally, the return of as much MEV to the user. This is bidding and merit-based admittance. The execution market achieves “Minimizes MEV” for users in the above figure. This preference environment makes all users’ preferences transparent. These preferences are placed in an open market by the execution market. This allows all executors to realize user preference through bidding and not just individual builders. This solves the problem of EOF.
After integrating the outputs of the preferred environment, the execution market, a network builder collaborates to build blocks instead of one builder. This step allows builders to share the information without disclosing Orderflow or Bundle content. In the later stage of the SUAVE roadmap, security solutions such as SGX will be introduced to meet this requirement.ThoughtsPart 1If we put aside MEV for the time being and think about SUAVE from the perspective of blockchain, then we can sort out the development trend and narrative logic of a blockchain.First of all, based on the blockchain, Bitcoin realizes value transfer without a trusted third party, and the blockchain provides the most fundamental trust as a financial infrastructure.After that, the public chain represented by Ethereum is used as the execution environment of dApp, which can be further divided into the general execution environment represented by General Purpose Alt-L1/Rollup and the dedicated execution environment represented by Appchain/Approllup. The network, consensus, and other components are abstracted into a single entity. We ignore the technical details that are essentially the soil for dApp development. Celestia takes apart the components of the execution environment. Although the DA layer is a blockchain, it is not the “execution area” itself. The consensus between nodes is only for Data Blob. The blockchain is introduced at this point to increase the trust level in DA. SUAVE also abstracts Sequencing and Mempool from multiple execution layers to create a unified coordination layer. SUAVE’s design, including transaction types and fee structure can be customized to “express” MEV and is not necessarily the same as the previous blockchain design. Multi-chain and multiparty collaborations see the blockchain more as a coordination layer. We can see that the infrastructure is evolving from a centralized, general-purpose layer to a professional layer. Part 2This article will discuss the general design of SUAVE. SUAVE is still in its early research phase and no information is available about its specific implementation. Two challenges SUAVE might face are suggested by the author.
The centralization problem in the current Sequencer has yet to be solved. The Sequencer for Optimism & Arbitrum is managed by a team. It is not centrally centralized. Each Rollup has included a plan for decentralization in its roadmap, which includes Sequencing. Optimism proposes to spin Sequencer using both economic and governance mechanisms. Arbitrum also proposes its Fair Ordering scheme. Vitalik previously listed several methods in his article An Uncomplete Guide to Rollups. These include Sequencer auctions and PoS-based random sampling. Other proposals include Cosmos’ First Come, First Served, Chainlink’s Fair Sequencing Service, (FSS), and Espresso Systems’ Decentralized Sequencer middleware. This vision is clearly more ambitious. It will be difficult to convince each Rollup to adopt the solution.
Quintus stated in the article that Uniswap and Metamask represent dApp, wallet and RPC service providers respectively and control the majority (and often the value) of Ethereum’s total order flow. Infura accounts for more than 70%. These traffic terminals, which are the checkpoints for transaction issue, control the flow order flow and play an important role in the MEV supply chains. The role of these entities was highlighted in the design and implementation of SUAVE. This is to make it easier for Orderflow Owners to monetize their orders and generate profits. Although dApps and wallets may have concerns, RPC service providers and RPC service providers may not be as concerned. However, searchers and builders are motivated by their interests. If SUAVE provides high-quality order flows, then wallets can change the RPC port to send transactions directly to SUAVE. Some changes may be necessary if the wallet must adapt to the preferred environment or execution market. SUAVE must also establish cooperation with core traffic in order to realize its vision. Part 3: In the past, users were limited in their ability to express their transaction intentions. Transaction status on the chain was largely dependent on the status of the network. Transactions could not be customized. SUAVE’s concept of “preference” allows users to set the conditions for transactions on the network. For example, “I want this transaction to be in a specific position in a particular block of a given domain”. The freedom and richness of user intentions has been increased. However, users can set the conditions for transactions on the chain using the SUAVE concept of “preference”. For example, “I want to place this transaction in a certain position in a certain block of a particular domain”. This further requires a reasonable design of the fee structure.Additionally, we have seen narratives such as Rollup-as-a-Service, DA-as-a-Service, and Restaking-as-a-Service. In the next period of time, various zkEVM projects will be launched on the main network one after another, and the decentralized sorting layer is also within the planning of each Rollup roadmap.Therefore, Sequencing-as-a-Service is a potential direction that we can tap. These Rollups will decide whether to adopt the FCFS solution or outsource Sequencing services to professionals. Or, they may choose to use a combination of multiple solutions. This will determine the market share of the Sequencing project and the competitive landscape. SUAVE will create a market of more than 10 billion dollars based on the certainty of its MEV supply chain structure. The community is always moving towards the goal of decentralization, and we respect the continued efforts of the community to illuminate the dark forest.The new decade of MEV we describe competition, not a monopoly; sharing, not exclusive; co-governance, not dictatorship.DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.Join us to keep track of news: https://linktr.ee/coincuHaroldCoincu NewsTags: BlockchainDeFiEthereumFlashbotsMEVPFOFSUAVE