June 21, 2024
1 Solar System Way, Planet Earth, USA

Ethereum struggles with MEV bots, executive maintains Solana has been successful

Unlike Bitcoin, where transactions are first come, first served, Ethereum and Solana rely on a group of validators to confirm transactions and add them to the next block. This process allows for flexibility as users can speed up their transactions by paying higher fees.

At the protocol level, prioritizing transactions based on gas rates has inadvertently led to the rise of the complex Maximum Extractable Value (MEV) bots on Solana and Ethereum. By exploiting the system, these robots have become a major factor in the current debate over gas rates.

Do MEV Bots Increase Gas Fees on Ethereum?

Now, the debate over validators, gas fees, and the impact of MEV bots on Solana and Ethereum is heating up. Mert Mumtaz, co-founder of Solana RPC provider Helius, leading X, highlighted the role of a single sandwich bot, Jaredfromsubway, which was the main source of gas fees on Ethereum.

This bot alone is responsible for a staggering 142 ETH per day, surpassing the fees paid by major players like Coinbase.

MEV bot is the largest source of gas fees on Ethereum |  Source: @0xMert_ via X
MEV bot is the largest source of gas fees on Ethereum | Source: @0xMert_ via X

Since this MEV robot is the highest source of gas fees in EthereumThe co-founder maintains that by not subsidizing validators, the Ethereum Foundation is indirectly supporting MEV bot operators to continue “stealing” from retail traders.

As things stand, Ethereum, known for its scalability issues, is the most expensive network to conduct transactions on. Although chain scaling is a concern, the proliferation of MEV robots, as seen with Jaredfromsubway, could be contributing greatly.

Is Solana doing a better job addressing MEV Bots?

In light of this, the analyst notes that Ethereum developers have failed to address the MEV threat despite years of research and dedicated solutions at various protocol levels.

Due to this persistent issue and the extensive, coordinated research that continues to fail on Ethereum, the analyst believes that Solana is doing much better in handling the impact of MEV bots on gas rates.

Solana price with downward trend on the daily chart |  Source: SOLUSDT on Binance, TradingView
Solana price with downward trend on the daily chart | Fountain: SOLUSDT on Binance, TradingView

Solana currently and actively subsidizes the majority of its validators. The subsidy, absent on Ethereum, penalizes traders who conduct MEV operations, discouraging the behavior. However, it is crucial to know that the subsidy goes towards voting costs and not the cost of hardware and operation.

Still, some think that this approach only offers “Band-Aid” solutions. In any case, they argue that Solana actually “invented” and “weaponized” the MEV. There are other claims that SOL holders like Multicoin Capital prioritize chains based on their MEV capture potential.

Recently, it was discovered that some of these subsidized validators allowed MEV to interleave users. While the Solana Foundation quickly remote your bet, remains to be seen whether the MEV attacks will stop.

Featured image from Canva, TradingView chart

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