Marinade Finance offers new governance proposal to tackle oversized role of MEV
Solana DeFi platform Marinade Finance has offered a series of governance proposals aimed at tackling unchecked MEV to ensure decentralization and safety in the ecosystem.
Marinade Finance posted its governance proposal titled “Tackling Malicious Validators and Democratizing MEV on Solana” on the Marinade community forum on Dec. 11. The Solana (SOL) -based non-custodial liquid staking protocol asked for feedback from its community regarding its set of proposals aimed at managing MEV.
MEV, which stands for Maximal Extractable Value, is described as the value that is extracted from transaction sequencing. Marinade views MEV as “both a challenge and an opportunity.”
This is because MEV has the potential to enhance the network’s efficiency through optimizing liquidity, improving price discovery, and rewarding validators. However, when unchecked, MEV can also make the ecosystem vulnerable to sandwich attacks, front-running, and risk centralization.
In an email to crypto.news, CEO of Marinade Finance Michael Repetný emphasized the importance of maintaining decentralization, transparency, and innovation in the blockchain. Therefore, he believes that addressing the challenges posed by malicious validators and MEV is crucial for the health and sustainability of the Solana ecosystem.
“At Marinade Labs, we recognize that while MEV cannot be eliminated, its impact can be managed, and its value can be distributed fairly,” said Repetný.
Repetný explained that at a recent stake auction marketplace held by Marinade, validators were able to set bids that were way higher than the reasonable standard when it came to rewards on Solana because the system was open and transparent. Without proper data, he said the team was unable to separate the legitimate validators from the ones participating in malicious MEV activities.
“Some external research confirmed our observations, explaining that the value of negative MEV externalities has not only been growing but also started to centralize instead of being distributed among many actors.”
Repetný.
In the forum post, Marinade Labs explained that MEV can be tackled with strategies that prioritize reducing harmful MEV and redistributing the inevitable MEV through open markets. The first involves forming a public committee in charge of monitoring validators.
The committee will work on identifying malicious validators that are proven to have harmful actions. After identifying which validators are bad actors, the committee will cut their PSR bond. This action is done to discourage future malicious activity from other validators and protect the network.
The second proposal is reopening the public mempool in order to decentralize access to MEV. The staking protocol argued that the distribution of MEV opportunities in public mempools is much fairer compared to private mempools that risk centralizing the deal flow.
The third and final proposal involves allocating treasury funds from Marinade DAO or MNDE DAO for research on Solana MEVs. The research initiatives are aimed at analyzing MEV trends, risks, and opportunities, exploring strategies to mitigate harmful MEVs, and developing tools to make MEV more transparent and inclusive.
The research findings will be used to guide future governance decisions and create improvements for the Solana ecosystem.
Repetný stated research on MEV should be the first priority for the Solana ecosystem as it will help developers to identify the problem and mitigate MEV.
“Funding the MEV research to get better visibility into the problem, such as what platforms suffer the most from negative MEV, quantifying the problem, and putting together existing research pieces like “A sandwich-resistant AMM” into an actionable list on how to mitigate the negative externalities of MEV.”
Repetný
