Five perspectives on transaction ordering, MEV, and frontrunning

Due to a recent post by Ari Juels and collaborators and a long tweet about it, the debate in the Ethereum community about miner-extractable value (MEV) and transaction ordering has heated up again. This debate often conflates issues that I think should be kept separate. So, based on what I've published in the past, I'd like to make five arguments again that hopefully bring some clarity to these issues.

Argument 1: Front-running hurts users.

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The first point, and the one most often overlooked in this heated debate, is that frontrunning reduces market value and discourages user participation. A world with less front-running — a world that extracts less value from users — is a better world.

The results of the "Referendum on the Treatment of Platform Tokens held by Recovered Zhang Jian" are released: According to the official announcement, the FMex (FCoin's contract exchange) community tried to promote the first referendum after the restart "About the recovered platform held by Zhang Jian Referendum on Token Processing Method” results released: All FT held by Zhang Jian personally totals 1118212096.480847884738123583, and all future dividend income will be used to repurchase FUSD. Equivalent mapping to FUSD holders after the snapshot: agree 95.24%;

All FMEX held by Zhang Jian personally totals 18821597.1475001, and all future dividend income will be used to repurchase FUSD. The voting rights of this part of FT will be mapped to FUSD in proportion to the FUSD snapshot at 0:00 (GMT+8 time) the day before the voting. People: agree 90.35%;

At present, the recovery of the platform currency held by Zhang Jian has been permanently locked. According to the results of the referendum, all its dividends will be used to repurchase FUSD, and the specific data of repurchase will be announced through an announcement, and the voting rights of this part of the platform currency will be mapped to FUSD holders. The ownership of this part of the platform currency still belongs to the community, and the community has the right to decide how to allocate or use it through a referendum in the future. [2020/5/12]

At this point you could argue that frontrunning is unstoppable, or that we are unfortunately stuck in an equilibrium with more frontrunning. These plausible arguments can all be assessed on merit. But frontrunning is at best an unavoidable evil, and the community should find ways to reduce it.

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Argument 2: All else being equal, transaction sequencing should be sold in a transparent market if frontrunning exists.

Ethereum today is vulnerable to front-running: miners have the power to control the ordering of transactions within the blocks they produce. As long as this doesn't change, miners will always be able to snap up users, or sell their slots in the ordering of transactions.

If sorting is for sale, it should be sold transparently so people can see what's going on, and the opportunity to pay for sorting should be open to all regular users, not just insiders. Systems like Flashbot didn't cause the frontrunning problem, they just made it less bad.

Argument 3: Some designs and protocols are more resistant to frontrunning than others, and this resistance is a good thing.

Not all protocols are created equal. How much frontrunning can exist in a protocol depends on how the protocol is designed. So when we evaluate a protocol, we should ask whether it increases or decreases the chance of a frontrunner. This is not the only thing to consider, but it should be a factor when we evaluate new agreements or changes to existing agreements.

Argument 4: There is still a lot of research to be done on how to make systems more resistant to false starts, and how to make various resistance systems more practical.

There are still many unknown factors about how to achieve consensus through fair ordering. The current research is promising and appears to be able to find significant improvements. It is important to continue to advance this research and transition more mature research into practice. Over time, our system gets better and better at resisting early runs.

Argument 5: The worst thing we can do right now is adopt a structure that increases frontrunning and trap ourselves in it.

First, don't hurt the user. Adopting new protocols that increase front-running, such as using "MEV auctions" will make the front-running problem worse and should be avoided as much as possible.

Worst of all this change will trap us in a world with more stealth. Not only does this cause immediate damage, but it also has a long-lasting effect that prevents us from accepting a better and more resistant system.

The community will be dealing with bootlegs for a long time and is working on reducing them.

Thanks to Harry Kalodner and Offchain Labs.

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