MEV Bots Impacting Ethereum and Solana Transaction Fees
In the world of cryptocurrency, Ethereum and Solana stand out for their use of validators to confirm transactions, unlike Bitcoin’s system. This setup allows for faster transactions with higher fees, but it has also paved the way for Maximal Extractable Value (MEV) bots, causing disruptions on both networks.
The influence of MEV bots on gas fees has sparked debates within the Ethereum and Solana communities. Mert Mumtaz, co-founder of Solana RPC provider Helius, shed light on the significant role played by the “Jaredfromsubway” bot on Ethereum. This single bot alone racks up an astounding 142 ETH in daily gas fees, surpassing even major entities like Coinbase. Mumtaz argues that by not supporting validators, the Ethereum Foundation indirectly supports MEV bot operators, allowing them to exploit retail traders.
Ethereum, known for its scalability challenges, remains the most costly network for transactions. The presence of MEV bots like Jaredfromsubway only worsens this situation. Despite ongoing efforts by Ethereum developers, the MEV problem persists without a concrete solution.
On the other hand, Solana takes a different approach by actively subsidizing most of its validators, a strategy not seen in Ethereum. This subsidy, particularly for voting costs, discourages MEV operations by penalizing those involved in such activities. However, critics view this approach as merely a temporary solution, with some even suggesting that Solana has inadvertently empowered MEV practices.
There have been instances where subsidized validators in Solana have been caught participating in MEV attacks, such as “sandwiching” users. The Solana Foundation swiftly took action by removing their stakes, but it remains to be seen if MEV attacks will come to a halt.
Ethereum developer Ryan Berckmans acknowledges the persistent MEV issue despite extensive research within the Ethereum community. He questions the effectiveness of Solana’s subsidies, expressing concerns that they may lead to undesirable outcomes.
Both Ethereum and Solana grapple with the challenges posed by MEV bots. While Ethereum’s lack of validator support contributes to high gas fees, Solana’s approach provides a temporary solution to the ongoing issue.