MEV
MEV can be good and bad. Blink's aim is simple: maximise the good - eliminate the bad.
Bad MEV
Bad MEV is when an actor is able to get their transaction included earlier in a block then the a user's transaction. This allows them to manipulate the state of the blockchain (e.g. liquidity pools) to give a user worse execution.
Sandwich attacks are a classic example of this. Below is a screenshot of the notorious jaredfromsubway "sandwiching" a transaction on Etherem:
In the above transactions, jaredfromsubway made the owner of the transaction pay a 9% higher price and made (stole) a whopping $31,633.58.
Spoiler Alert: if the user had been using Blink, this wouldn't have happened!
Good MEV
For good reasons, MEV gets a bad name. However, it's not all bad. In fact, in the right circumstances it can provide several benefits:
Price Improvement
Arbitrage helps align prices across different trading venues
Reduces price discrepancies between DEXs
Creates more efficient markets
Token Holder Benefits
Generates protocol fees from increased trading volume
Can provide additional yield for liquidity providers
Often results in better token prices for users
Technical Benefits
Helps maintain price equilibrium between pools
Can prevent extreme price impacts from large trades
Provides additional market liquidity
User Value Return
When implemented properly (like with Blink), users can receive a portion of the MEV value
Transforms what could be lost value into user benefits
Makes trading more cost-effective for users
In fact, there is no downside (except for Jared). User's execution is unchanged. Markets are more efficient.
How it works
What's a "Bundle"
A blink bundle are typically 2 transactions that are sent to block builders as a pair. There is a convention in the block building world that bundles cannot be frontrun or "un-bundled" (i.e. separated with transactions in between.
Furthermore, bundles must be included together or not at all. This prevents searchers from sending their backrun transaction separately (and avoiding the recovery fee).
MEV is recovered with the following steps:
User sends raw transaction to Blink
Blink shares (without the signature) with its trusted searcher network
Searchers send back bundles.
Blink's MEV Engine pick best bundles to recover value for the User
Blink sends the bundles to block builders.
Block builders include the transaction onchain with a refund back to Blink / Originator / User... Depending on setup
Last updated