The Solana Ecosystem Meme Token Craze Sparks Discussion on MEV Issues

Recently, meme tokens in the Solana ecosystem have become the focus of the market. Meme tokens such as BONK and Dogewifhat have been favored by crypto users, with Dogewifhat already listed on multiple mainstream exchanges and a market cap exceeding $3 billion. On March 15, the BOME token initiated by crypto artist Darkfarms surged over 47 times within 24 hours, with trading volume exceeding $300 million.

However, with the rise of the meme craze, some issues have also emerged. Users frequently suffer from sandwich attacks when purchasing meme tokens on decentralized platforms on the Solana chain, resulting in higher purchasing prices and losses. These types of attacks fall under the category of MEV (Maximum Extractable Value). So, what exactly is MEV? What impact does it have on the blockchain ecosystem? How does Solana respond to the challenges posed by MEV?

MEV and Its Applications

MEV stands for Maximal Extractable Value, originally referring to the value that miners can extract. In the Bitcoin network, miners gain additional rewards by reordering transactions within the blocks. As blockchain technology has evolved, the concept of MEV has expanded to various public chain networks, becoming a common phenomenon.

MEV can be seen as a "tax" that blockchain network maintainers charge users. Although it seems to increase the burden on users, MEV plays an important role in maintaining network stability and promoting ecological development.

Common MEV application strategies include:

1. Atomic arbitrage: Arbitrage using price differences between different liquidity pools, which helps balance asset prices.

2. Liquidation: In on-chain lending operations, the liquidator maintains protocol stability by liquidating unhealthy positions through MEV.

3. Sandwich Attack: Profiting by inserting buy and sell operations before and after user transactions, utilizing the AMM price mechanism.

In addition, MEV is also applied to profitable activities such as IDO and NFT minting.

The MEV Status of Solana

Solana uses the PoS consensus mechanism, and the validating nodes are mainly operated by large data centers. To incentivize validators to process more transactions, Solana stipulates that 50% of all transaction fees must be burned.

Solana produces a block every 400 milliseconds. Previously, due to the first-come-first-served transaction processing mechanism, MEV competition was mainly focused on low latency rather than high transaction fees. However, this approach is demanding and costly.

To address the MEV issue, Solana has taken the following measures:

1. Garbage trading: A common frontrunning method in the early days, but it can lead to network congestion.

2. Priority gas fee: Part of the new upgrade that reduces spam transactions by increasing transaction priority.

3. Jito-Solana: Similar to Ethereum's Flashbot, it introduces mempool and block space auction mechanisms.

Currently, Jito-Solana has become the mainstream validation client for Solana, accounting for 66%. However, during the recent meme craze, sandwich attacks initiated through Jito have caused troubles for ordinary users.

Correct Understanding of MEV

MEV cannot be completely eliminated, and research should focus on how to utilize MEV to benefit all parties in the ecosystem. For example:

• Guide validators to choose diverse clients through MEV
• Use MEV to protect user and protocol assets
• Redistribute MEV profits to promote the development of the network ecosystem.

In summary, MEV is a double-edged sword. Proper use of MEV can optimize network performance and enhance ecosystem efficiency. However, we must also be vigilant about the potential negative impacts of MEV and seek a balance, so that it truly becomes a driving force for the advancement of blockchain technology.