What is Maximal Extractable Value (MEV)?
source: Introducing the MEV Supply Chain
Maximal Extractable Value (MEV) refers to the maximum value that can be extracted from block production in excess of the standard block reward and gas fees by including, excluding, and changing the order of transactions in a block. The Ethereum Foundation explains some MEV use cases and consequences on their website.
If you are a validator, you probably cannot and don’t want to search for MEV opportunities yourself. But there is a way to benefit from it, while at the same time helping the network – some call this “ethical MEV” or “democratized MEV”. By far the most prominent implementation of doing this was developed by Flashbots. Flashbots is a research and development organization working on mitigating the negative externalities of Maximal Extractable Value (MEV) extraction techniques and avoiding the existential risks MEV could cause to stateful blockchains like Ethereum.
To learn more, I can recommend this introductory session about the MEV supply chain, or dive deeper into the utopian vs. dystopian consequences via the great slides and videos of mev.day conference held in April.
If you are a Blockdaemon $ETH staking customer, we’ll get in touch with you before the Merge with details on how we’ll enable you to participate in MEV – stay tuned!
Wen Merge? Switching Ethereum from Proof-of-Work to Proof-of Stake
With the second major trial run successfully done on Sepolia test network this week, the Merge on Ethereum Mainnet seems still on track for (late) August. Before that, Goerli testnet will be merged in a few weeks time as the last test network.
Don’t be confused by the Gray Glacier hard fork that happened on Mainnet last week. This was done to push back the “Difficulty Bomb”, but did not mean a delay of the Merge itself! It just keeps the time between blocks in check, as it would have increased quicker than anticipated before.
Therefore, user experience on Mainnet will stay as-is and there will be enough time to finish all merge preparations without too much pressure on the core client developers, who ultimately decide on the Merge timing. We’ll keep you updated in this newsletter!
Which testnets will be supported after the Merge?
source: Tim Beiko on twitter
The big milestone of the Merge will also be used to update the Ethereum testnets this year. While the Kiln testnet was always meant to be short-lived to test the Merge, this also effects the long-standing Ropsten and Rinkeby networks, which will be deprecated by Q4-2022 and Q2/3-2023, respectively.
While this might appear to be quite some time in the future, we do recommend customers to start the migration planning now, as it often takes longer than expected and unplanned Mainnet upgrades may no longer be applied to deprecated testnets. In general, we recommend a switch to our Goerli testnet infrastructure. We will soon provide support for Sepolia as well.
For more details and the differences between the two future testnets, the Ethereum foundation has published a comprehensive blog post.
How big is too big?
The first to market, and by far biggest retail liquid staking provider on Ethereum, LIDO currently manages ~32% of all staked ETH (90% of liquid staking). This has triggered prominent Ethereum community members to call for limiting the share of any operator (with numbers ranging from 15% to 22% to 33%). While the LIDO nodes are actually setup and maintained by 22 different operators (including Blockdaemon), a governance attack vector could still be seen as a potential threat. Valid points in favor and against limiting LIDO and the potential solutions on how to achieve the desired results are discussed in the forum topic.
At Blockdaemon, we obviously are all in favor of choice across different valuable offerings as a means to keep things decentralized. Which is why besides LIDO, we also support other liquid staking protocols such as StakeWise, with whom we partner for our institutional liquid staking offering.
New Product & Protocol Releases
- ETH Staking Reports now featured on the ETH Staking Dashboard
- Sign up to learn more about our Institutional Liquid Staking
Blockdaemon Ethereum Ecosystem Lead
“The future is on Ethereum—the most vibrant, mature, and diverse decentralized ecosystem.”