Unlike Bitcoin, where transactions are ordered on a first-come, first-served basis, Ethereum and Solana rely on a pool of validators to confirm transactions and add them to the next block. This process allows for flexibility, as users can expedite their transactions by paying higher fees.
At the protocol level, prioritizing transactions based on gas fees has inadvertently led to the rise of complex Maximal Extractable Value (MEV) bots on Solana and Ethereum. By exploiting the system, these bots have become a significant factor in the ongoing debate about gas fees.
MEV Bots Pushing Gas Fees Higher On Ethereum?
Now, the debate surrounding validators, gas fees, and the impact of MEV bots on Solana and Ethereum is escalating. Mert Mumtaz, the co-founder of Solana RPC provider Helius, taking to X, highlighted the role of a single sandwich bot, Jaredfromsubway, which was the top source of gas fees on Ethereum.
This bot alone is responsible for a staggering 142 ETH per day, surpassing fees paid by major players like Coinbase.
With this MEV bot being the highest source of gas fees on Ethereum, the co-founder argues that by not subsidizing validators, the Ethereum Foundation is indirectly endorsing MEV bot operators to continue “robbing” retail traders.
As it is, Ethereum, notorious for its scalability issues, is the most expensive network to transact on. Though on-chain scaling is a concern, the proliferation of MEV bots as seen with Jaredfromsubway, could be contributing immensely.
Is Solana Doing A Better Job At Addressing MEV Bots?
In light of this, the analyst points out that Ethereum developers have failed to address the MEV menace despite years of dedicated research and solutions at various protocol levels.
Because of this persistent problem and coordinated and extensive research that continues to fail in Ethereum, the analyst thinks Solana is doing much better in handling the impact of MEV bots on gas fees.
Solana currently and actively subsides most of its validators. The subsidy, absent in Ethereum, penalizes operators engaging in MEV operations, discouraging the behavior. Nonetheless, it is crucial to know that the subsidy is on voting costs and not the cost of hardware and operation.
Even so, some think this approach only offers “band-aid” solutions. If anything, they argue that Solana actually “invented” and “weaponized” MEV. There are other claims that SOL holders like Multicoin Capital prioritize chains based on their MEV capture potential.
Recently, some of these subsidized validators were caught enabling MEV to “sandwich” users. While the Solana Foundation swiftly removed their stake, it remains to be seen whether MEV attacks will stop.
Feature image from Canva, chart from TradingView
