Flashbots Explained: MEV-Boost, Suave & More

What is Flashbots?

Flashbots is an Ethereum-focused organization addressing Maximal Extractable Value (MEV), the process by which network operators profit from reordering or including transactions. Since Ethereum’s Merge, MEV has become increasingly problematic, with over $1.8 billion extracted to date.

Founded in 2020 by Stephane Gosselin and Phil Daian, Flashbots develops open-source tools, including MEV-Boost, linking validators with block builders, and SUAVE, a decentralized system for transaction sequencing.

The project raised $60 million in a Series B funding round led by Paradigm, with additional undisclosed backers. This funding helps Flashbots achieve its mission of developing decentralized and transparent blockchain transaction processing systems that save users tens of millions of dollars each year.

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Maximal Extractable Value Explained

Maximal Extractable Value (MEV) is the maximum profit block producers, such as validators in proof-of-stake systems, can extract by prioritizing, excluding, or reordering transactions within a blockchain block. It is most commonly seen in PoS networks like Ethereum and Solana.

MEV exploits often involve frontrunning, where an attacker submits a transaction with a higher gas fee to execute before a user’s profitable trade, and sandwich attacks, which manipulate DEX trades by placing a buy order before and a sell order after a target trade to exploit price changes.

Both techniques exploit the transparency of blockchain networks and harm users by inflating transaction costs and reducing the fairness of decentralized systems. Projects like Flashbots aim to address these issues by preventing transactions from being visible in the public mempool.

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How Does Flashbots Work?

Flashbots coordinates multiple entities in the block production process to optimize MEV extraction while reducing its negative effects on users and network fairness.

• Searchers: Identify MEV opportunities, create transaction bundles, and submit them to relays.
• Bundles: Group related transactions in specific orders to capture MEV efficiently, such as through arbitrage or liquidations.
• Relays: Validate bundles for profitability and non-malicious intent, acting as intermediaries between searchers and validators.
• Builders: Aggregate bundles and mempool transactions to build blocks with maximum profitability.
• MEV-Boost: Middleware that connects validators to builders, enabling them to select the most profitable blocks while preserving decentralization.
• Privacy: Flashbots Protect routes transactions through a private mempool, hiding details until they are included in a block, shielding users from frontrunning.
• Rewards: MEV profits are distributed among validators, searchers, and users, fostering participation while minimizing centralization risks.

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What is MEV-Boost?

MEV-Boost, an open-source tool by Flashbots, connects Ethereum validators to a block-building marketplace to increase rewards. It enables validators to delegate block construction to builders specializing in MEV extraction, who pay for block proposals.

For example, a validator using MEV-Boost might choose a builder offering 0.1 ETH for including a well-optimized MEV transaction bundle, maximizing rewards and ensuring efficient transaction handling.

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SUAVE Explained

SUAVE (Single Unifying Auction for Value Expression) is Flashbots' decentralized system designed to address centralization risks in blockchain block building and transaction sequencing.

It unbundles the mempool and block builder roles, creating a plug-and-play alternative that allows users to express transaction preferences while preserving privacy.

For instance, SUAVE allows users to retain control over their transaction data while enabling builders to maximize cross-domain MEV opportunities, ensuring fair value redistribution across multiple blockchains.

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Benefits of MEV-Share

MEV-Share is a protocol developed by Flashbots that allows users, wallets, and applications to internalize the MEV their transactions create.

It enables users to selectively share transaction data with searchers, who then bid to include the transactions in bundles based on their MEV potential. By redistributing MEV revenue, MEV-Share returns a significant portion of this value directly to users, aligning incentives across the network.

The protocol offers privacy controls, allowing users to specify how much data is shared, balancing transparency with confidentiality. In practice, a user executing a large DEX swap can earn a portion of the MEV their trade generates or run an arbitrage bot that uses flash loans.

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Other Flashbots Products

Flashbots offers a comprehensive suite of tools and infrastructure for blockchain efficiency, transparency, and user benefits while addressing MEV-related challenges.

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Supporting Products

Flashbots' supporting products provide essential tools for transaction protection, block auctions, and MEV optimization.

• Flashbots Protect: A private transaction pool that safeguards users from frontrunning and sandwich attacks while reducing gas fees and ensuring transaction inclusion only when successful. It has been used by over 2 million users since its release in 2021.
• Flashbots Auction: A sealed-bid auction mechanism enabling block proposers to trustlessly outsource block construction to the most profitable bundles, maximizing MEV extraction without sacrificing user privacy.
• MEV-Geth: A modified Ethereum client integrating private transaction pools and MEV auctions, ensuring efficient block construction while protecting against MEV-related exploits.

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Developer Tools

Flashbots offers developer-focused tools to simplify MEV integration and create improved blockchain strategies.

• Simple-Arbitrage: A reference implementation for discovering and executing arbitrage opportunities, ideal for developers looking to build profitable MEV searchers.
• Searcher-Sponsored-TX: A tool allowing developers to create sponsored transactions, where one account pays the gas for another, enabling advanced execution scenarios.
• Searcher-Minter: A demonstration application showcasing how MEV tools can be used for specific cases like NFT minting, helping developers explore creative use cases.

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Analytics

Analytics tools provide detailed insights into MEV activity, enabling a better understanding of market trends and opportunities for profit.

• MEV-Inspect: A real-time monitoring and reporting tool for analyzing MEV trends, allowing developers and researchers to gain actionable insights into transaction behaviors.
• MEV-Explore: A visual analytics platform offering in-depth exploration of MEV data, enabling users to identify patterns, evaluate impacts, and optimize strategies effectively.

How to Use Flashbots

By incorporating Flashbots tools into your Ethereum transactions, you can improve transaction efficiency and safeguard against MEV. The process is as follows:

• For Validators: Install and run MEV-Boost to connect with a competitive marketplace of block builders, maximizing staking rewards while supporting decentralized block construction.
• For Ethereum Users: Use Flashbots Protect RPC to send private transactions, ensuring protection from frontrunning and earning potential MEV refunds.
• For Developers: Leverage developer tools like Simple-Arbitrage, Searcher-Sponsored-TX, and Searcher-Minter to build custom bots for capturing MEV opportunities.
• For Searchers: Submit transaction bundles through Flashbots’ private relay to access block builders, ensuring privacy and maximizing profitability.
• For Analysts: Utilize MEV-Inspect and MEV-Explore to gain insights into MEV activity and potential strategies.

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Final Thoughts

Flashbots has achieved significant milestones in mitigating MEV challenges through innovations like MEV-Boost and the development of SUAVE.

However, community discussions in The MEV Letter highlight ongoing challenges, including decentralizing block building and improving privacy.

Active research and collaboration remain crucial to addressing these issues effectively. The journey ahead demands collective effort to ensure a sustainable and equitable blockchain future.