In a recent development, Ethereum researcher Justin Ðrake has unveiled a continuation proposal for EIP-1559: MEV Burn. The proposal aims to address the issue of miners or verifiers manipulating transaction orders by burning the excess income generated from MEV (Maximal Extractable Value).
By reducing the incentives for individual miners to manipulate transactions, the proposal seeks to enhance the fairness and security of the Ethereum network.
The Building Blocks Of Ethereum’s MEV Burn Proposal
The proposal consists of two main parts. The first part provides a recap of the enshrined Priority-Bidding System (PBS) and its components. These include builder balances, builder addresses, builder bids, winning bids, payload reveals, and attester enforcement.
The proposal lays the groundwork for the MEV burn add-on by summarizing these elements. The MEV burn add-on, described in the second part, introduces the concept of a payload base fee.
Bids submitted by builders specify a payload base fee, which should not exceed the builder balance minus the payload tip.
Crucially, the payload base fee is burned, even if the payload is revealed late or deemed invalid. Attesters set a subjective floor on the payload base fee during bid selection, contributing to a fair and transparent process.
Ðrake emphasizes that MEV burn offers several security benefits. By smoothing and redistributing MEV spikes, the proposal minimizes the incentives for proposers to engage in malicious activities like short-chain reorganizations or p2p attacks.
Furthermore, the proposal reduces reward variance, protecting honest proposers from the volatility associated with MEV spikes.
It also addresses concerns about toxic MEV whitewashing and provides rug pool protection for collateralized external operators.
Beyond its security advantages, the MEV burn add-on brings economic benefits similar to those of EIP-1559. It reduces the validator count, resulting in lower issuance and more economic bandwidth.
Additionally, the proposal enhances economic sustainability by diversifying revenue streams for ETH holders and improving tax efficiency.
The MEV burn proposal put forth by Ethereum researcher Justin Ðrake represents a significant step toward creating a fairer and more secure Ethereum network.
By addressing the manipulation of transaction orders by burning excess MEV income, the proposal aims to maintain the integrity of the network while delivering economic benefits to stakeholders.
Nevertheless, as Ethereum continues to evolve, proposals like MEV burn to pave the way for a more robust and sustainable ecosystem.