Broadcasting transactions before they are executed imposes a “hidden tax” on retail crypto users while alienating financial institutions.
Maximal extractable value (MEV), the process of miners or validators reordering transactions in a block to extract profits, is preventing financial institutions from adopting decentralized finance (DeFi), which hurts retail users, according to Aditya Palepu, CEO of DEX Labs, the lead contributor to decentralized crypto derivatives exchange DerivaDEX.
All electronically-traded markets suffer from maximal extractable value or similar issues inherent in the information asymmetry in ordering trading transaction data, Palepu told Cointelegraph.
The solution is to prevent order flow data from being visible before execution through processing transactions in trusted execution environments, which handle transactions privately through a funded vault or some other mechanism, Palepu said. He added:
