133 - Flashbots and MEV

Stephane Gosselin is the Founder of Flashbots, an R&D organization that’s trying to fix the most pernicious problem in crypto-the problem of MEV (Maximum Extractable Value).
Many of us are massively optimistic about crypto and aren’t worried too much about its future. However, this MEV thing could be our achilles heel.
On this episode, we dive into what Stephane and his team are doing to make MEV less of a potential weak point, how MEV works, and what our industry would look like if Flashbots didn't exist. And of course-so much more.
This is another fundamental Bankless episode that you won’t want to miss.
------
📣 Chainlink | Register for SmartCon 2022 with promo code “BANKLESS”
bankless.cc/smartcon
------
🚀 SUBSCRIBE TO NEWSLETTER: www.bankless.com/join
🎙️ SUBSCRIBE TO PODCAST: podcast.banklesshq.com/
------
BANKLESS SPONSOR TOOLS:
🌱 LENS | ACCESS CODE: MERGE (only valid for 24 hours!)
bankless.cc/Lens
🚀 ROCKET POOL | ETH STAKING
bankless.cc/RocketPool
⚖️ ARBITRUM | SCALING ETHEREUM
bankless.cc/Arbitrum
🦁 BRAVE | THE BROWSER NATIVE WALLET
bankless.cc/Brave
🌉 JUNO | BRIDGE FIAT TO LAYER 2
bankless.cc/Juno
⚡️ ZKSYNC | THE LAYER 2 SCALING ENDGAME
bankless.cc/zkSync
------
Topics Covered:
0:00 Intro
9:28 MEV Explained & Its Importance
13:35 The Evil Side of MEV
21:26 MEV Utopia vs. Dystopia
28:54 Competitiveness, Market Structure, Equilibrium
32:10 MEV Supply Chain Crashcourse
37:24 Timeline
38:56 Flashbots Thesis
42:31 No MEV Geth Scenario
45:15 Flashbots Continued
49:10 Solutions
51:15 MEV Boost
1:00:18 MEV Boost Adoption
1:05:10 Differences in Staking APY
1:08:20 Flashbots Incentives
1:12:57 Infinite Problems to be Solved?
1:14:35 PBS
1:17:54 Relayer Role
1:20:05 Weird MEV Potential Merge Issues?
1:22:40 Byproducts of MEV Boost
1:27:17 New Builder Market Speculation
1:31:15 Stephane’s Optimism
1:32:55 Closing & Disclaimer
------
Resources:
Stephane Gosselin
/ thegostep
MEV-Boost in a Nutshell
boost.flashbots.net/
Flashbots Blog Posts
writings.flashbots.net/writings
Guide to Ethereum Roadmap
newsletter.banklesshq.com/p/g...
Ethereum’s Hidden Power Structure
newsletter.banklesshq.com/p/1...
-----
Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.

[@davycrockett8886]

The important things I've got out of this hot topic is: 1. A MEV open market is important for fairness in arbitrage 2. MEV is optional 3. MEV boost has censorship risks 4. PBS is aiming to reduce censorship risks in the future. Imo considering all this, some people should run MEV boost, but we NEED people to not initiatially run MEV boost too, to insure we maintain censorship resistance. When PBS is up and safe against censorship we can reconsider.

[@EricGray1936]

Probably one of the best episodes Bankless has done. Informative and insightful.

[@pccrypto]

Huge respect for Flashbots!

[@rasheed3616]

Extremely informative interview. Thank you for bringing us this information. Much appreciated

[@monkeygames1771]

love this shit, spent the last 3 years 10hrs a day learning to get here and well beyond in some cases. I got hooked!

[@christophehkg6056]

This was an amazing conversation ! Thanks

[@envelop]

Thanks, guys, for another amazing upper-technical episode! We love Bankless and often recommend you in our ENVELOP Podcast.

[@cecilechau7932]

MEV is the most concerning decentralization risk; MEV is not necessarily unhealthy; it is what makes AMM possible; 3 solutions - outsourcing, block space

[@lherfel]

thanks, awesome, very enjoyable episode

[@zenith7498]

Hey Bankless, when bringing Cow Protocol

[@lherfel]

Cosmos chain Osmosis has some MEV protection by encryption of mempool. Hard to exploit by reorder, censor, add tx if one cannot see the tx in the mem pool. this seems ideal approach?

[@David-rz4vc]

Yeah I think some folks are looking into doing that with threshold encryption

[@davycrockett8886]

What if you don't run MEV boost, do you not get any MEV or do you still receive some?

[@scottmacmillan8898]

Great topic and interview. In fact guys, I think you should trust that your guest is explaining things correctly without trying to add your own 2 cents and basically repeating what they said. Stephane did a great job explaining what MEV was and the Utopia Vs. Dystopia. Done. No need to try and put it into Bankless parlance as Ryan said. Other than that. Great job.

[@davycrockett8886]

I just want to warn validators against choosing profit over everything else. At the end of the day Ethereum is our product and we don't want to price ourselves out of the market and we do have competition.

[@agentcrypto4388]

LENS ACCESS CODE IS NOT WORKING PLEASE REPLY

[@airportatheist1645]

Hi David 👋

[@davycrockett8886]

The problem is; you have some FUD going around saying MEV boost is built into PoS Ethereum and that it can be censored and therefore Ethereum is centralised. This is of course nonsense, but one needs to defend against this narrative. This misunderstanding fails to say MEV boost is optional and that PBS is being worked on looking to stop possible censorship.

[@Kazebeat]

So if Stephane Gosselin is Dr. Strange defending the etherverse from MEV monsters, who is Wong??

[@AmadeoBrandsONDeFi]

What about privacy ...

[@lherfel]

Bankless: interview POKT devs?

[@beefyogurt]

bitcoin only

[@avidavid2525]

why did you delete my comment @ryan/david??

[@user-vk2md9yq1e]

anyone thinks he sounds just like joe lubin?

[@darkomijic]

MEV = miner extractable value.

[@abeidiot]

ofacbots. truth is, builder centralization will be an issue even with competition, you can't beat the best because there's always a chance the best will not be open source. We must become radical as a community and show cutthroat acceptance of slashing censors if needed. 🏴‍☠ I'm honestly a fan of paying validators directly through contracts, allowing elimination of mev builders(there was a poc made a few days ago)