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Is MEV mining still a risk today? If so, what is the industry doing about it?

Published

11 months ago

11 May, 2024

Is MEV mining still a risk today? If so, what is the industry doing about it?

The maximum mineable value is closely associated with the Ethereum network, but in reality it can be problematic for any blockchain platform.

Known in industry jargon as MEV, the term refers to additional value which can be mined by block validators, or those who are responsible for creating new blocks of processed transactions that are immutably stored on the blockchain.

MEV can be achieved by manipulating the order in which transactions are processed. In many cases, block producers sequence transactions in order to increase their profits, and this practice often has a negative impact on other network users. There are many methods to do this, including front-running attacks and sandwich attacks.

The dangers of the MEV

For regular blockchain users, the primary risk associated with MEV is known as “on the front line”, where block producers pre-handle a significantly sized purchase order pending in the mempool with one of their transactions. They will place a similar buy order before the transaction to purchase that asset at a more favorable price. Once the order is filled and then the other large buy order is processed, the value of the underlying asset can increase significantly. The favorite can then sell the asset at a substantial profit.

A related strategy is known as “sandwich”, which is when the block producer places a buy order before and a sell order after a significant transaction that results in a price movement. This allows them to benefit from pricing pressure from both sides. Both of these strategies are considered malicious because they extract value from innocent internet users.

The state of the MEV today

There were concerns about the MEV first raised at the time, Ethereum was still in development as the world’s first smart contract blockchain. As a result, MEV became closely associated with Ethereum, which relied on a proof-of-work consensus mechanism at the time of its launch. At the time, only miners had the power to rearrange and exclude certain transactions to gain extra value.

As such, the term was originally known as “Miner-Extractable Value.” However, with Ethereum’s “merge” update in September 2022, it moved from the PoW consensus mechanism to a Proof-of-Stake algorithm, meaning that miners are no longer creating new blocks.

– Announcement –

However, the switch did nothing to stop MEV. Rather, it simply means that the door is open for other participants – such as validators – to participate in the MEV instead. With this transition, many have come to refer to MEV as “maximum extractable value.”

It is fair to assume that the main beneficiaries of MEV are block producers, but in reality almost anyone can – and does – participate in this process. In fact, it is believed that most of the value mined these days does not end up in the hands of block creators, but rather “researchers”, who are dedicated individuals who use special software to analyze blockchain transactions found in the mempool (where to wait to be processed) to seek profitable opportunities for MEV. They then try to partner with block producers to share the spoils.

Why is MEV still a problem?

While MEV has been known for a long time, even before the launch of Ethereum, the decentralized ethos of blockchain has prevented the industry from finding a comprehensive solution. Depriving block producers of the right to sequence transactions as they wish would go against the industry’s commitment to decentralization, meaning a more technical solution is needed.

Numerous teams have been working to create MEV solutions for years and have had some success. For example, in May 2021, Ethereum miners reportedly carried out mining approximately 140 million dollars in MEV in just 30 days. However, according to data as of May 10, 2024, the amount mined by users in the last 30 days dropped to just $2.4 million. data from Flashbot.

Ethereum is the main target of MEV techniques because it often suffers from network congestion, which means slow block times and higher fees. Additionally, it has the largest and most mature DeFi ecosystem in the industry, meaning it processes many complex transactions that can maximize profit opportunities for those engaging in MEV.

The majority of MEV losses stem from DeFi protocols such as Uniswap, Aave, and Compound, which are also targeted by a phenomenon known as “liquidation front-running,” in which researchers attempt to find and execute liquidation transactions to secure a part of the liquidator’s commission, which provides a large discount on the guarantee.

How is the industry combating MEV?

As awareness of the dangers of MEV grows, so do the strategies implemented by the industry to prevent its occurrence.

One approach that appears to have been very successful is the use of Fair sequencing services or FSS. It refers to a decentralized transaction ordering service that aims to ensure absolute fairness in how transactions are ordered, eliminating the possibility of MEV attacks. FSS is typically applied in Layer-2 rollups such as Arbitrum, enabling the scalability of the smart contract-based economy while minimizing the consequences of MEV on individual users.

An alternative idea is Flashbots, which is a blockchain research organization that has devised a transparent market for MEV mining. Essentially, it allows users to send transaction packets directly to block producers, reducing the harmful impact of things like gas price auctions to achieve more efficient MEV mining. With Flashbots, block producers are prevented from gaining excessive influence. Allows any participant to mine MEV via the mev-geth client. It provides all participants, regardless of their blockchain knowledge, to examine the Ethereum mempool and identify MEV opportunities, so they can reorder their blocks in the most profitable way.

It could be a more extreme and efficient solution Fully homomorphic encryption, which introduces full encryption of blockchain data, obscuring transaction participants and amounts from the process. By introducing completely confidential transactions, Fenix aims to eliminate the opportunity for MEV completely. Block producers will no longer be able to see transaction details, which prevents them from manipulating the order in which transactions are processed. It creates a much fairer environment for blockchain users, preserving the integrity of the network.

The beauty of Fhenix’s FHE solution is that it allows you to perform calculations on encrypted data without the information being decrypted first. This means it can also be used with the complex smart contracts that facilitate multi-step transactions in DeFi.

Eliminating MEV will bring great benefits to the blockchain community. First, it prevents anyone from front running and other actions that unfairly extract value from other network participants. In this way, FHE provides a strong guarantee regarding the fairness of transactions. Since block producers cannot see any transaction data, they instead process transactions according to the network’s rules, rather than using their discretion. Furthermore, it also prevents block producers from being able to censor the transactions of certain users.

Final thoughts

MEV may not be as big of a problem today as it was in the past, but the threat remains real. It provides an unfair advantage to those who practice it and can still have huge negative implications for some users, especially traders who make large volume transactions.

Some continue to argue that MEV benefits blockchain ecosystems by eliminating inefficiencies in how transactions are processed, helping to speed up the network as a whole. For example, when MEV users rush to exploit arbitrage opportunities, their actions will quickly result in price corrections in the DEX ecosystem. Likewise, lending protocols benefit from faster settlements in the event of loan default. As researchers rush to profit from the liquidation event, the collateral level of the defaulted loan is prevented from becoming too imbalanced.

Despite these benefits, the injustice of MEV remains acute. Front-running and sandwich attacks almost always lead to negative outcomes for regular network users, who are required to overpay transaction fees and execute their trades at disadvantageous rates, suffering from significant slippage. Additionally, MEV also leads to higher gas fees and slower transaction processing, as intense competition among searchers adds to network congestion.

Fortunately, the blockchain industry is making good progress against MEV, and with the advent of easy-to-implement solutions like FHE, we may not be far from the day when it ceases to be a problem altogether.

Disclaimer: This content is informational and should not be considered financial advice. The opinions expressed in this article may include the personal opinions of the author and do not reflect the opinion of The Crypto Basic. Readers are encouraged to do thorough research before making any investment decisions. Crypto Basic is not responsible for any financial losses.

-Announcement-

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Ether Drops Further After ETF Launch

Published

9 months ago

23 July, 2024

Blocksight Staff

Bitcoin Surpasses $66,000 Thanks to Strong ETF Flows

Key points

Spot ether ETFs began trading in the U.S. today, with the funds initially having more than $10 billion in collective assets under management.
Analysts expect the launch of spot ether ETFs to have a net negative impact on the underlying price of ether in the near term, due to expected outflows from the pre-existing Grayscale Ethereum Trust.
Spot Bitcoin ETFs continue to see strong inflows, with BlackRock’s IBIT alone seeing more than $500 million in inflows on Monday.
Franklin Templeton, a spot ETF issuer on bitcoin and ether, has invested in a project that intends to bring Ethereum technology to Bitcoin.

Nine-point ether exchange-traded funds (ETFs)) started trading on the stock market on Tuesday, but all the optimism ahead of their approval did not translate into gains for the cryptocurrency markets.

Ether (ETH), the native cryptocurrency of the Ethereum blockchain, dropped less than 1% around the $3,400 level as of 1:30 PM ET, while Bitcoin (BTC) fell more than 2% to around $66,000.

Ether ETFs’ Debut Isn’t as Flashy as Bitcoin ETFs’

Spot ether ETFs began trading at just over $10 billion assets under management (AUM)), according to Bloomberg Intelligence analyst James Seyffart, most of that money is in the current Grayscale Ethereum Trust (ETHE) which has now been converted into an ETF.

“In the long term, Grayscale will simultaneously have the highest and lowest fees in the market. The asset manager’s decision to keep its ETHE fee at 2.5% could lead to outflows from the fund,” Kaiko Research said in a note on Monday.

Outflows from ETHE, if they occur, would be similar to those faced by Grayscale’s Bitcoin Trust (GBTC) after spot bitcoin ETFs began trading in January of this year, most likely due to high fees for the two original funds. Grayscale’s existing fund charges 2.5% fees, while a new “mini” ether ETF will charge 0.15% and commissions for other ETFs are set at 0.25% or less.

Such outflows could impact the price of ether and market sentiment.

“There could be a pullback shortly after the launch of Ethereum spot ETFs, i.e. outflows from Grayscale Ether Trust could dampen market sentiment in the short term,” Jupiter Zheng, a partner at Hashkey Capital’s liquid fund, told The Block.

But Grayscale remains optimistic.

“Compared to the splashy debut of spot bitcoin ETPs in January, the launch of ethereum ETPs has been relatively muted,” said Zach Pandl, Grayscale’s head of research, adding that investors may be “undervaluing” ether ETFs that are “coming to the U.S. market in tandem with a shift in U.S. cryptocurrency policy and the adoption of tokenization by major financial institutions.”

Bitcoin ETF Inflows Continue to Rise

As for bitcoin, there is clearly no lack of demand for spot ETFs, such as BlackRock’s iShares Bitcoin Trust (IBITS) recorded its sixth-largest day of inflows in its short history on Monday, at $526.7 million, according to data from Farside Investors. Daily inflows for the overall spot bitcoin ETF market also hit their highest level since June 5.

In particular, asset manager Franklin Templeton, which has issued both bitcoin and ether ETFs, appears to have decided to cover its back when it comes to Ethereum by investing in Bitlayer, a way to implement Ethereum technology on a second-layer Bitcoin network, according to CoinDesk.

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Spot Ether ETFs Start Trading Today: Here’s What You Need to Know

Published

9 months ago

23 July, 2024

Blocksight Staff

Spot Ether ETFs Start Trading Today: Here's What You Need to Know

Key points

Spot ether ETFs will begin trading on U.S. exchanges on Tuesday. Nine ETFs will trade on Cboe BZX, Nasdaq and NYSE Arca.
Ether ETFs offer investors exposure to the price of their underlying assets.
Commissions on these new ETFs generally range from 0.15% to 0.25%.
These ETFs do not provide exposure to Ethereum staking.

The U.S. Securities and Exchange Commission (SEC) has officially approved nine ether spots (ETH)exchange-traded funds (ETFs) for trading on U.S. exchanges. Trading for these new cryptocurrency investment vehicles begins today. Here’s everything you need to know.

What new ether ETFs are starting to trade today?

Spot ether ETFs starting trading today can be found at Quotation, NYSE Arkand Cboe BZX. Here’s a breakdown of each ETF you can find on these three exchanges, along with the fund tickers:

Cboe BZX will list the Invesco Galaxy Ethereum ETF (QETH), the 21Shares Core Ethereum ETF (CETH), the Fidelity Ethereum Fund (FETH), the Franklin Ethereum ETF (EZET) and the VanEck Ethereum ETF (ETHV).

Nasdaq will have the iShares Ethereum Trust ETF (ETHA) created by BlackRock, which also operates the largest spot bitcoin ETF under the ticker IBIT.

NYSE Arca will list the Bitwise Ethereum ETF (ETHW) and the Grayscale Ethereum Trust (ETHE). The Grayscale Ethereum Mini Trust (ETH), which will begin trading on the same exchange.

How does an ether ETF work?

Spot ether ETFs are intended to offer exposure to the price of ether held by the funds. Ether is the underlying cryptocurrency of the Ethereal network, the second largest crypto network by market capitalization.

ETF buyers are buying shares of funds that hold ether on behalf of their shareholders. Different spot ether ETFs use different data sources when it comes to setting the price of ether. Grayscale Ethereum Trust, for example, uses the CoinDesk Ether Price Index.

None of the ETFs launching today include pointed etherwhich represents a potential opportunity cost associated with choosing an ETF over other options such as self-custody or a traditional cryptocurrency exchange.

Ether staking currently has an annual return of 3.32%, according to the Compass Staking Yield Reference Index Ethereum. However, it is possible that the SEC will eventually approve Ether staking held by ETFs.

How can I trade Ether ETFs?

ETFs can simplify the trading process for investors. In the case of cryptocurrencies, instead of taking full custody of the ether and taking care of your own private keysSpot ether ETFs allow investors to purchase the cryptocurrency underlying the Ethereum network through traditional brokerage accounts.

Today, not all brokers may offer their clients spot ETFs on cryptocurrencies.

What are the fees for ether ETFs?

The fees associated with each individual spot ether ETF were previously revealed In the S-1 OR S-3 (depending on the specific ETF) deposit associated with the offerings. These fees are 0.25% or less for all but one.

The Grayscale Ethereum Trust, which converts to an ETF, has a fee of 2.5%. The Grayscale Mini Ethereum Trust has the lowest fee at 0.15%. These fees are charged on an annual basis for the provider’s management of the fund and are in line with what was previously seen with spot bitcoin ETFs.

Brokers may also charge their own fees for cryptocurrency trading.

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Kamala Harris Odds Surge Amid $81M Fundraise. What Does It Mean for Bitcoin and Cryptocurrencies?

Published

9 months ago

23 July, 2024

Blocksight Staff

Kamala Harris Odds Surge Amid $81M Fundraise. What Does It Mean for Bitcoin and Cryptocurrencies?

Market odds and memecoins related to US Vice President Kamala Harris have soared as the latest round of donations tied to the Democratic campaign raised $81 million in 24 hours, bolstering sentiment among some traders.

The odds of Harris being declared the Democratic nominee have risen further to 90% on cryptocurrency betting app Polymarket, up from 80% on Monday and setting a new high.

Previously, in early July, bettors were only betting on 8%, but that changed on Saturday when incumbent President Joe Biden announced he would no longer run in the November election. Biden then approved Harris as a candidate.

Polymarket traders placed $28.6 million in bets in favor of Harris, the data showsThe second favorite is Michelle Obama.

Somewhere else, Memecoin KAMA based on Solanaa political meme token modeled after Harris, has jumped 62% to set a new all-time high of 2 cents at a market cap of $27 million. The token is up a whopping 4,000% from its June 18 low of $0.00061, buoyed primarily by the possibility of Harris becoming president.

As such, Harris has yet to publicly comment on cryptocurrencies or her strategy for the growing market. On the other hand, Republican candidate Donald Trump has expressed support for the cryptocurrency market and is expected to appear at the Bitcoin 2024 conference on Saturday.

However, some expect Harris or the Democratic Party to mention the sector in the coming weeks, which could impact price action.

“While he has not yet received the official nomination, there is consensus that last night’s development is in line with current Democratic strategy,” cryptocurrency trading firm Wintermute said in a Monday note emailed to CoinDesk. “Keep an eye on Democrats’ comments on this issue in the coming days.

“The prevailing assumption is that Harris will win the nomination and any deviation from this expectation could cause market volatility,” the firm added.

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Top 30x Cryptocurrency and Coin Presales Today: Artemis Coin at #1, Others Are: BlockDAG, 99Bitcoin, eTukTuk, and WienerAI

Published

9 months ago

23 July, 2024

Blocksight Staff

Top 30x Cryptocurrency and Coin Presales Today: Artemis Coin at #1, Others Are: BlockDAG, 99Bitcoin, eTukTuk, and WienerAI

The cryptocurrency market has seen a lot of growth and imagination lately, with new ventures popping up regularly. A critical pattern in this space is the rise of crypto pre-sales, which give backers the opportunity to get involved with promising projects early on. Artemis is a standout option for crypto investors looking to expand their portfolios amid the many pre-sales currently underway.

Cryptocurrency presales, commonly referred to as initial coin offerings (ICOs), allow blockchain ventures to raise capital by offering their local tokens to early backers before they become available on open exchanges. Investors can take advantage of these presales by purchasing tokens at a lower price. If the project is successful and the token’s value increases, investors stand to receive significant returns.

>>> Explore the best cryptocurrency pre-sales to buy now <<

The Ultimate List of the Top 5 Cryptocurrency Pre-Sales to Invest In

Artemis: The aim of Artemis (ARTMS) will become the cryptocurrency equivalent of eBay or Amazon. The upcoming Phase 4 will see the launch of the Artemis Framework, which will serve as a stage for digital money exchanges where buyers, sellers, specialized organizations and those seeking administration can participate in coherent exchanges.
DAG Block: uses Directed Acyclic Graph technology to increase blockchain scalability.
99bitcoin: operates as a crypto learning platform
WienerAI uses AI-powered trading bots for precise market analysis.
eTukTuk focuses on environmentally sustainable transportation options, such as electric vehicle charging infrastructure.

We have determined that Artemis is the best new cryptocurrency presale for investment after conducting extensive research. It presents itself as the unrivaled cryptocurrency presale choice currently open.

>> Visit the best cryptocurrency pre-sale to invest in now <<

Top 5 Crypto Pre-Sales and Best Cryptocurrencies for Investment Today

Artemis (ARTMS) is attempting to establish itself as the cryptocurrency version of eBay or Amazon. The Artemis Crypto System, which will act as a platform for cryptocurrency transactions, will be launched in Phase 4. Buyers, sellers, service providers, and requesters will all benefit from seamless trading with this system. Customers will be able to purchase things, such as mobile phones using digital money, as well as sell products such as involved bicycles and get paid in cryptocurrency. Additionally, crypto money can be used to pay for administrations such as clinical consultations, legitimate care, and freelance work. Artemis Coin will act as the main currency of the ecosystem, with Bitcoin and other well-known cryptocurrencies from various blockchain networks backing it.

Artemis Coin has increased in price from 0.00055 to 0.00101 from 0.00094. Artemis may be attractive to individuals looking to recoup losses in Bitcoin, as predicted by cryptocurrency analysts. At this point, it seems to present an interesting presale opportunity.

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The world of digital currency pre-sales is an exciting and exciting opportunity that could open the door to game-changing blockchain projects. Projects in this article, like Artemis Coin, offer the opportunity to shape the future of various industries and the potential for significant returns as the industry develops.

However, it is imperative to approach these investments with caution, thorough research, portfolio diversification, and awareness of the risks. You can explore the digital currency pre-sale scene with greater certainty and increase your chances of identifying and profiting from the most promising venture opportunities by following the advice and methods in this article.

>>> Join the best cryptocurrency pre-sale to invest in now <<

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