Peek into the dark forest of Ethereum through MEV-Explore

特邀专栏作者

2021-03-04 08:33

This article is about 2044 words, reading the full article takes about 3 minutes

If it is said that the front-running transaction makes Mempool a dark forest, then MEV-Explore once again makes all MEV transactions transparent through the Leaderboard.

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If it is said that the front-running transaction makes Mempool a dark forest, then MEV-Explore once again makes all MEV transactions transparent through the Leaderboard.

Editor's Note: This article comes fromGolden Finance, reprinted by Odaily with authorization.

Editor's Note: This article comes from

Golden Finance

, reprinted by Odaily with authorization.

In nature, survival of the fittest and law of the jungle are universal laws. Perhaps the same is true in the crypto world.

As we all know, all transactions on the Ethereum blockchain enter the Mempool first, and then are packaged into blocks by miners. At the same time, miners will give priority to packaging those transactions with high gas fees.

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What is MEV

If a miner monitors Mempool and finds a transaction with a high profit prospect, then copy this transaction but pay a higher Gas fee to preemptively confirm this transaction. This is also known as a "frontrunner".

This phenomenon has been noticed in 2019. Phil Daian and others published the paper "Flash Boys 2.0" in 2019 and coined the term "Miner Extractable Value" (MEV, Miner Extractable Value).

In Ethereum Mempool, miners and arbitrage robots lurk in the transaction pool, monitoring the transactions waiting to be confirmed, and once they find a profitable opportunity, they will pay a higher gas fee to raid and rush away those transactions waiting to be confirmed. Therefore, the Ethereum transaction pool is called the dark forest.

But this dark forest has long been a paradise for miners, scientists, and geeks, and it is difficult for ordinary users of Ethereum to see through it.

Recently, Flashbots announced the launch of the visual MEV product MEV-Explore v0, including the dashboard (Dashboard) and the MEV browser (Leaderboard).

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As mentioned above, DeFi traders and arbitrage robots have joined the ranks of front-running transactions, so in the definition of MEV-Explore, MEV is no longer just the "Miner Extractable Value" defined by Phil Daian et al. , but the Maximum Extractable Value.

A total of $349 million in MEV has been withdrawn since January 2020, with $117 million in MEV withdrawn in the past month alone.

Accumulation of MEV that has been withdrawn since January 1, 2020Ethereumimage description

Daily extracted MEV

The MEV that has been extracted mainly occurs in 8 DeFi protocols, as well

The 8 DeFi protocols with the most users and the main concentration of transactions in the ecosystem: Uniswap, SushiSwap, Balancer, dYdX, AAVE, Curve, 0x, Compound. In terms of decomposition, Uniswap accounted for 46%, SushiSwap accounted for 20%, Balancer accounted for 12%, dYdX accounted for 9%, AAVE accounted for 4.2%, Curve accounted for 3.8%, 0x accounted for 3.7%, and Compound accounted for 0.99% %.

The withdrawn MEV is mainly arbitrage, accounting for as high as 93%. Followed by liquidation, accounting for 6.2%. Arbitrage + liquidation accounted for 0.81%.

The extracted MEV mainly flows into the hands of frontrunners and miners (in the form of miner fees). The vast majority of them were taken by the front-runners (88%), and 12% flowed into the hands of miners in the form of miner fees.

It is worth noting that even a false start can fail. MEV-Explore data shows that since January 1, 2020, failed frontrunning transactions have cost a total of $5.6 million in gas fees, and these failed frontrunners occurred in block 47553.

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Some information about MEV-Explore

MEV-Explore collects and builds dashboard-based data through MEV-Inspect, a blockchain crawler that scans Ethereum and identifies MEV extraction activity. MEV-Explore is the UI on it.

Obviously, the extracted MEV is not equal to the total MEV, but a subset of MEV.

MEV-Explore data range from the first block 9193266 on January 1, 2020

MEV-Explore currently covers 8 DeFi protocols: Aave, Balancer, Compound, Curve, DyDx, Sushiswap, Uniswap V2 and 0x, and the scope of protocols will be expanded in the future.

Covers only single trade MEV opportunities and does not include sandwich trades or multiple arbitrage trades.

CEX-DEX arbitrage is also not covered, as there is no publicly available data on CEX to scrape.
Withdrawn MEV = successful MEV transaction + successful MEV transaction gas fee + failed MEV transaction gas fee
MEV-Explore divides the withdrawn MEV into types: arbitrage, liquidation and arbitrage + liquidation.

Arbitrage trades are defined as Ethereum trades where the starting balance is lower than the ending balance. If the two balances are in different assets, MEV-Explore converts the two balances into ETH quantities using the Uniswap market price.

A liquidation transaction is defined as an Ethereum transaction that performs a liquidation and records its withdrawn MEV by: 1) viewing the withdrawn MEV obtained by selling the collateral they received in the same transaction; 2) by using the Uniswap price to convert Collateral is converted to ETH without taking into account the potential slippage of selling collateral.LeaderboardArbitrage + liquidation transactions are defined as Ethereum transactions that perform the above two actions in a single transaction.