Ari Juels, Chief Scientist at Chainlink Labs, unveiled a new solution at SmartCon 2023 for solving the MEV challenge. MEV stands for Maximal Extractable Value, which refers to the maximum amount of value that can be extracted from block production in excess of the standard block reward.
MEV is a measure of the profit a miner can make through their ability to arbitrarily include, exclude, or re-order transactions within the blocks they produce. It is a complex, systemic problem for public blockchains, particularly for smart contract blockchains with complex transactions.
Fair Sequencing Services (FSS)
In his talk, Ari first introduced an earlier solution called “Fair Sequencing Services,” designed to safeguard user transactions against exploitation in blockchain networks. However, he also addressed the inherent limitations of this approach and proposed a novel solution – Protected Order Flow (PROF).
Juels highlighted a crucial issue in blockchain systems: the temporary centralization of transaction ordering despite blockchain’s decentralization.
Validators or miners decide how to order transactions within a block, leading to the potential for manipulation. This results in what is known as Miner Extractable Value (MEV).
To address this issue, the speaker pointed out that although Fair Sequencing Services (FSS) has been Chainlink’s main solution for sequencing transactions fairly and guarding against MEV, it has certain limitations.
One of the limitations is that it reduces MEV extraction, making it less attractive for validators. As a result, FSS blocks may not be chosen, or validated rendering the concept ineffective.
Introducing Protected Order Flow (PROF)
Ari went on to present an innovative solution called “Protected Order Flow” or PROF. This system makes use of a trusted execution environment (TE) within CPUs, providing both integrity and confidentiality to transactions.
PROF assembles transactions into fair bundles and appends them to blocks, ensuring they cannot be manipulated by the MEV supply chain.
The scientist stated that PROF offers validators a choice between two blocks: one from the MEV supply chain with less MEV and one enriched with a fair transaction bundle, providing more reward. Validators are incentivized to choose the PROF-enriched block.
Users also benefit from PROF, as it allows them to submit transactions to the fair bundle, protecting them from MEV extraction.
With the economic incentives and advantages of PROF, widespread adoption is expected, leading to a fairer and more secure blockchain ecosystem.
Future applications of PROF
He hinted at the potential for PROF to harmonize with decentralized Oracle networks, further enhancing the security and fairness of blockchain transactions.
By leveraging trusted execution environments, PROF promises to bring fairness and security to blockchain transactions while addressing the challenges posed by MEV in the ecosystem.
