Applied MEV protection via Shutter’s threshold encryption

Explore how Shutter uses threshold encryption to fight MEV, its strengths and trade-offs.

Transparency is one of the foundational features of blockchains, but it enabled value extraction by controlling the order and inclusion of transactions within a block, known as MEV, or maximal extractable value.

This problem is common on most blockchains and is rooted in the public nature of mempools, a ledger that stores pending transactions data. This information allowed block producers and other actors to benefit from frontrunning transactions. 

MEV is especially notorious on Ethereum, where it continues to be extracted at a rate equivalent to 11% of block rewards. Data shows that nearly $300,000 was lost in sandwich attacks in September. This reveals that MEV is a recurring hidden fee, not a minor inefficiency, hitting large trades hardest in volatile markets.

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