Episode 91 of Season 4 of The Scoop was recorded remotely with The Block's Frank Chaparro and Viktor Bunin, protocol specialist at Coinbase and Stephane Gosselin, MEV boost architect & co-founder of Flashbots.
In the crypto world, MEV (‘Maximal Extractable Value’) refers to block producers’ ability to reorganize the sequence of transactions in any given block to extract a premium.
While MEV can be used nefariously in instances such as front-running large transactions, it can also be used for arbitrage opportunities that do not directly impact other market participants.
In this episode of The Scoop, we take a closer look at the world of MEV with Viktor Bunin, a protocol specialist at Coinbase, and Stephane Gosselin, the founder of Flashbots — a research project that provides MEV solutions to Ethereum validators.
According to Gosselin, the purpose of Flashbots is to make markets more efficient:
“We look at market structures, we research them and we develop products to try to improve them, and make sure that they're aligned with the intent of the chains that they're operating on top of.”
How Flashbots works in practice is essentially by creating a separate layer where users can bid against each other to have their transactions included on the blockchain.
As Bunin explains,
“It essentially creates a private mempool or a ‘fastlane’ where it says, ‘Hey, you're welcome to compete all you'd like, but you should do it at this layer,’ and then there will be a standardized way by which whoever is a winning bid — essentially the winning transaction — that will be the one that gets included on the blockchain and no others.”
During this episode, Chaparro, Bunin, and Gosselin also discuss:
- How Coinbase Cloud plans to integrate Flashbots’ tech
- What Flashbots is doing to mitigate centralization concerns
- Why Flashbot’s MEV Boost redistributes value more efficiently than traditional finance
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