Step 4.10 MEV Boost

What is MEV?

Maximal Extractable Value (MEV) has emerged as a significant concept on the Ethereum network. It refers to the maximum potential value that can be extracted from the execution of transactions on a blockchain network, often through the manipulation of transaction ordering and inclusion.

When a validator creates a block, the usual approach involves a simple algorithm: maintaining a list of pending transactions, bundling as many as possible into the block being built, and submitting the block to the chain. MEV arises from the opportunities presented by the inherent transparency of blockchain networks, specifically the ability to observe the publicly accessible pool of pending transactions, also known as the mempool.

The transaction visibility on the mempool empowers validators to employ sophisticated and clever algorithms to manipulate the order of these pending transactions and, in certain instances, introduce new transactions between them to directly or indirectly profit.

MEV introduces risks such as front-running, sandwich attacks, and other transaction manipulation techniques, which can exploit the sequential nature of transaction execution. Therefore, MEV relays have emerged as a solution to address the challenges and concerns surrounding MEV in blockchain networks. Learn more

What are Block builders and Relays?

We discussed MEV and how validators can profit using MEV techniques. However, discovering MEV opportunities is not an easy task; it is quite challenging. This process requires powerful systems and complex algorithms that operate at high speeds to swiftly identify and extract MEV. These tasks are performed by state-of-the-art opportunity finders known as Searchers. Once an opportunity is discovered by the Searchers, they are shared with block builders who gather them to form complete Ethereum blocks.

One advantage for block builders is the visibility of validators assigned to each slot for an epoch. This information becomes visible to everyone a few minutes in advance. This advanced knowledge has enabled block builders to create entities where validators can register themselves for upcoming block proposals. Block builders can then submit bids for the blocks they want the validators to propose. Validators evaluate these bids and choose the one that offers the highest profit, proposing that block instead of creating their own. This entity where block builders and validators interact is known as a Relay.

MEV relays are actively being researched and developed by the Ethereum blockchain community. The goal is to create a more secure, efficient, and equitable environment for validators, decentralized applications, and end users. Learn more

What is MEV Boost?

We discussed MEV relays and how they help the validators above, however, navigating multiple relays and ensuring your node is registered and connected to each of them can be a daunting task. This is where MEV Boost helps us. MEV Boost, developed by Flashbots, is an open-source middleware that enables validators to participate in a competitive block-building market. It serves as an implementation of proposer-builder separation (PBS) specifically designed for proof-of-stake (PoS) Ethereum networks.

MEV Boost simplifies relay management by establishing communication with multiple relays which a validator has selected. So, the validator doesn't need to navigate through all the selected relays, MEV Boost operates and takes charge of the necessary tasks, such as registration, bidding, blind signing, and proposal management in collaboration with your Consensus client. Learn more

Please note that it is mandatory for node operators to choose an MEV option during ETH client configuration.

Node operators can select an MEV option provided under locally or externally managed:

• Locally managed: Choose this option if you would like Stader Node to take care of the MEV Boost client for you

• Externally managed: Choose this option if you would like to use and externally managed MEV Boost client.

If your prefer a locally managed MEV Boost:

You can select regulated or unregulated of both type of MEV. Below is the description of regulated and unregulated

• Regulated: Choose this option to activate relays that adhere to government regulations such as OFAC sanctions. "Regulated (All MEV Types)" permits all forms of MEV, including sandwich attacks.

  Relays for regulated type MEV: Blocknative, BloXroute regulated, Flashbots and Eden Network.

• Unregulated: Choose this option to activate relays that don't adhere to any sanctions lists and won't censor transactions. Unregulated (All MEV Types) permits for all forms of MEV, including sandwich attacks. (except BloXroute ethhical)

  Relays for unregulated type MEV: BloXroute ethical, Ultra Sound and bloXroute Max Profit

If your prefer a externally managed MEV Boost:

Please enter the externally managed MEV Boost client URL, e.g. http://192.168.1.46:18550