hack.summit( )

Block Building and MEV

Matt Cutler, CEO & Co-Founder of Blocknative gave this presentation on April 1 at Hack Summit 2023. This session discusses block building and MEV (maximal extractable value) in the context of Ethereum and its impact on the network. It also covers the progress since the Ethereum merge, the role of relays, and the future of MEV.  

Watch the recording below for:

• Background on block building and MEV
• Review of data on PBS (Proposer Builder Separation) and MEV
• Discussion on MEV's presence in various systems
• Future developments in Ethereum and MEV

Takeaway 1: Block building and MEV are critical components in the Ethereum ecosystem, and their increasing importance has led to more specialized actors and greater transparency.

In the webinar, Matt Cutler discussed the significance of block building and MEV (maximal extractable value) in the Ethereum ecosystem. He emphasized how the separation of proposer and builder roles in post-merge Ethereum has led to "programmable, expressive, and fluid value flows" as well as increased specialization and modularity within the network.

"Block building, because now you have actors who can do all sorts of specialized things in terms of constructing and ordering blocks, gives programmable, expressive, and fluid value flows," explained Cutler. He also noted that the MEV concept is present in various other systems outside of blockchain, but it is more transparent and explicit in the Web3 space, which is generally healthier for the ecosystem.

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Takeaway 2: The MEV boost model has been successful in reducing centralization and promoting a more efficient use of Ethereum block space.

Matt Cutler highlighted the success of the Mev boost model since its introduction in Ethereum's post-merge environment. According to Cutler, more than 88% of all Ethereum mainnet blocks have been outsourced to third-party providers, resulting in blocks that are 373% more valuable and 22% more efficient in terms of gas usage. This increased efficiency also leads to a higher deflationary pressure on Ethereum, benefiting all ETH holders.

"Everyone benefits from this: you get higher rewards, more efficient inclusion, and more efficient use of block space," said Cutler. The MEV-boost model has not only reduced centralization but also paved the way for new possibilities in the Ethereum ecosystem.

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Takeaway 3: The future of Ethereum's ecosystem will involve harnessing MEV for productive and equitable purposes, with ongoing efforts to promote fairness and sustainability.

As Ethereum continues to evolve, Matt Cutler sees the challenge of harnessing MEV for productive and equitable purposes as a key focus. He mentioned ongoing efforts like Wallet Boost, Flashbots, and other protocols that aim to enable MEV recirculation and promote fairness within the network.

"The real question is how do we harness MEV in a way which is both productive for the network and equitable for the users, and we're getting there," stated Cutler. He envisions a future where users, wallets, and protocols all become MEV-aware and share in the value extraction process, leading to a more sustainable and equitable Ethereum ecosystem.

• Proposer Builder Separation (PBS) has been successful since the Ethereum merge, with outsourced blocks being more valuable and efficient.
  
  
• MEV is present in various systems, such as search engines, concert ticketing, and air traffic control.
  
  
• Programmable and expressive block building allows for more equitable value flows and potential MEV recirculation.
  
  
• The future of Ethereum involves more specialized actors and modularity, with developments such as account abstraction and data availability sampling.