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Comment by toolz | Hacker News Reader

Do we have to accept that MEV is a problem? Just because it's been a tactic used in the shadows with traditional finance doesn't mean it's a problem in an open ecosystem where anyone willing to pay can play. There isn't some shadow elite funding a central government here lobbying for restrictive legislation to keep competition at arms length. In my opinion the crypto ecosystem in general is much more understanding and capable of finding ways to distribute information and trust, which prevents this from becoming a bad thing like we see in traditional finance.

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> Do we have to accept that MEV is a problem?

Yes and no. On the one hand, one does have to accept that "MEV" in the "_Maximum_ extractable value" is always going to be potentially present on a public blockchain - but often times, this is a good thing. Liquidity pool arbitrage is also "MEV", but is MEV that is absolutely vital to efficient markets, and the more advanced the players in that game get, the more everybody gets to enjoy liquid and efficient markets. On the other hand, more and more DeFi projects take in to consideration possible MEV extraction vectors when designing applications, and some even use "MEV protection" as a USP (such as CoWswap)

The real problem with MEV is that it distorts the consensus mechanism in weird and unpredictable ways. MEV is essentially free money that could be considered part of the block reward, but it exists at the application layer so it really can’t be accounted for in the consensus protocol incentive design. Application layer logic (“smart contracts”) can move arbitrary value in arbitrary ways, which can create wild volatility from block to block.

A similar problem appears to emerge when Bitcoin’s block reward disappears, as high volatility in block rewards would cause rational miners to behave in suboptimal ways.

Something that rarely gets addressed in these discussions is why Ethereum even has fee market to begin with instead of a cheap FIFO model which ideally would be more fair.

To answer that I would invite anyone to try using a blockchain under heavy load without any way for users to prioritize transactions. What you will find is the network becomes vulnerable to transaction spamming; possibly to point of breaking consensus making it so nobody can transact at all.

MEV is a consequence of a design decision to address this. And that's not to say Ethereum has everything figured out and a better FIFO model can't solve this, but afaik this is the current state of things.

FIFO? First in first out? The blockchain is essentially the timestamping machine. The timestamp of a transaction are untrusted until mined into blocks, even then a fork can rid them.

The blockchain is essentially solving the ordering problem, one big timestamp machine. The solution you propose would require a timestamp machine in the first place lol.

It’s what Cardano does

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