Researchers at Paradigm, Dan Robinson and Dave White, have introduced Miner Extractable Value (MEV) taxes to help decentralized applications recapture their own MEV, potentially redirecting value back to users and developers.
MEV refers to the profits that miners or validators can gain by reordering, including, or excluding transactions within a block. This new mechanism deploys a smart contract to impose a fee proportional to the transaction’s priority fee, allowing applications to conduct their own MEV auctions without off-chain infrastructure.
This technique could optimize trade execution in decentralized exchanges (DEXs) and reduce losses for automated market makers (AMMs), potentially benefiting liquidity providers.
For instance, a Solana-based MEV bot recently made $1.2 million in profits, showcasing the potential of MEV taxes to redistribute value.
However, the success of MEV taxes relies on block proposers adhering to competitive priority ordering regulations.
The introduction of MEV taxes represents a significant shift towards more equitable value distribution in decentralized finance, with long-term implications for the industry’s sustainability.
