Compared to Bitcoin’s transaction processing, which is based on arrival time, Ethereum and Solana utilize a set of validators to confirm transactions and include them in the forthcoming block. This validator system enables users to speed up their transactions by offering to pay more in fees.
However, at the core of these protocols, sorting transactions by fee size has inadvertently encouraged the creation of sophisticated Maximal Extractable Value (MEV) bots. These network manipulators have ignited a significant debate around the cost of gas on both Solana and Ethereum.
Are MEV Bots Elevating Ethereum’s Gas Prices?
Mert Mumtaz, co-founder of Solana RPC service Helius, recently pointed out the extensive influence of a particular MEV bot called Jaredfromsubway, noting it as a primary contributor to Ethereum’s gas pricing.
This bot is attributed with contributing an extraordinary 142 ETH worth of fees daily, outpacing what major entities like Coinbase pay.
Mumtaz argues that the Ethereum Foundation, by not providing financial support to validators, is essentially condoning the operation of MEV bots who end up “robbing” common traders.
Adding to Ethereum’s existing scaling woes, it is the most costly platform for conducting transactions. The growth of MEV bots such as Jaredfromsubway is believed to be heavily contributing to the network’s costs.
Is Solana More Effective in Managing MEV Bots?
It is highlighted that despite substantial research and potential remedies, Ethereum developers have not been successful in curbing the detrimental effects of MEV bots.
In contrast, Solana seems to be performing better in mitigating the influence of MEV bots on the network’s fees.
Solana currently provides financial assistance to most of its validators, a practice which Ethereum does not follow. This assistance, which comes in the form of subsidizing validation costs, intends to dissuade validators from participating in MEV strategies, even though it doesn’t cover hardware and operation expenses.
Yet, there are voices within the community suggesting that this strategy from Solana is just a temporary fix and that it might have in fact “created” and “amplified” the concept of MEV. There are claims that firms holding Solana tokens, like Multicoin Capital, are favoring blockchains based on how much MEV they can extract.
Some of the subsidized validators on Solana have been caught supporting MEV schemes to disadvantage users. Though the Solana Foundation responded quickly by withdrawing their stakes, it remains uncertain whether this will effectively deter future MEV activities.
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