The Good Tech Companies - Solana Needs to Fix Its MEV Problem

Episode Date: April 5, 2025

This story was originally published on HackerNoon at: https://hackernoon.com/solana-needs-to-fix-its-mev-problem. Solana has a big issue with MEV bots that cause sandwich attacks and losses and Titan, Ellipsis Labs and Jito offer solutions to reduce slippage Check more stories related to web3 at: https://hackernoon.com/c/web3. You can also check exclusive content about #blockchain, #mevbot, #mev, #solana, #sandwich-attack-explained, #slippage-reduction, #mempool, #good-company, and more. This story was written by: @contacttitan. Learn more about this writer by checking @contacttitan's about page, and for more stories, please visit hackernoon.com. MEV bots are a major issue for the Solana blockchain, leading to sandwich attacks and losses on swaps. Projects like Titan, Ellipsis Labs and Jito are working on solutions to protect against MEV searchers and reduce negative slippage.

This audio is presented by Hacker Noon, where anyone can learn anything about any technology. Solana Needs to Fix Its MEV Problem, by Chris Chung. Solana's recent governance vote on the SIMD-228 proposal, which put forward the idea of lowering Solana's inflation rate and boosting staking, showed the network can effectively handle major voting decisions without a hitch on the technical level. Meanwhile, we've also seen throughput on the network increasing to accommodate the huge volume of meancoin trading. However, one major hurdle remains on its path to becoming the, Nasdaq on the blockchain, MEV bots.

MEV stands for Maximum Extractable Value and refers to the additional profit that can be made from a transaction. MEV is like waiting in line at a store checkout, having someone cut in front of you to buy everything in sight, and then selling it back to the rest of the line at a higher price. The MEV problem. So how do MEV bots actually work? When you make a transaction, like buying or swapping tokens, that transaction goes into a waiting area, generally called a mempool, before it's added to a blockchain. Validators, the people or computers that add blocks to the chain, or bots can see these waiting transactions. They sometimes reorder or add their own transactions first to make a profit,

often paying huge fees to cut in line. Advocates see MEV as a byproduct of a healthy network and free market mechanics, while others stress the downsides for users. Whichever camp you find yourself in, though, MEV bots have been responsible for huge losses due to front-running and sandwich attacks. For example, Ethereum saw a total of $675 million extracted through MEV between December 2019 to September 2022. However, since 2024, Solana has been seeing a marked uptick in MEV activity duetto sandwich bots. This means traders on Solana are losing profits on a daily

basis to MEV bots. As such, unless the ecosystem figures out a way to approach the challenges posed by MEV, it threatens Solana's goal of providing distributed financial services at the speed of light. MEV on Solana is different. The thing is, MEV is intrinsic to all blockchains, especially when blockproposers rotate. It's not unusual for validators on any blockchain to manipulate transactions to extract profit. This can occur during NFT mints, liquidations, swaps, or by exploiting arbitrage opportunities. Not all MEV is bad, though, but certainly sandwiching and frontrunning are. Due to Solana's speed and architecture, however, certain types of MEVs are naturally

eliminated, and network participants' ability to extract value hingasen their ability to outperform the time to finality of Solana transactions. Moreover, since Solana doesn't have a mempool, MEV searchers have to integrate with existing high-stake node operators to see potential value extraction opportunities. Mempools aren't the solution, however, without a place to queue transfers, there's no other way than simply trying again when a transfer fails. To fix this, in 2023, JITTA launched a protocol off-chain that auctioned partial block space, providing inclusion guarantees for sets of transactions called bundles. The aim of creating an auction mechanism off-chain was to increase efficiency and reduce spam. While this move pulled existing MEV activity into the open, mitigated some of the front-running activities, and established a transparent auction mechanism, the lack of solid MEV protection tools still left the

end user at a severities advantage. As complaints from DeFi protocols and users mounted, Jeda Labs shut down ITS Mempool entirely. But Pandora's box had been opened, and private, even less beneficial mempools took its place. Centralization risks According to a Helios report earlier this year, much of the MEV revenue results from sandwich attacks and accrues to just one centralized entity, D's node. This suggests that while Jita's mempool was at least allowing this to happen transparently, these attacks have now moved into the dark. The key concern here is that if those validators that extract more value are left unchecked, it will be a permanent drag to Solana users. In short, fixing MEV

is not solely about creating a network that disincentivizes validators from lining their pockets with profits they sandwiched out of memecoin traders. It's also about ensuring the integrity and decentralization of the network. The search for a fix. MEV is a natural part of every blockchain network, but currently, it's benefiting a few at the expense of many. And this problem will likely increase exponentially, with JITTA co-founder Zano Shirwani predicting MEV will become a billion-dollar sector. Ethereum addressed its MEV problem mainly by establishing a transparent marketplace for it. This is complemented by various

tools, including MEV protection bots and RPCs, that aim to protect users from MEV. On Solana, suggestions to address the issue include whitelists, a last resort option as it would lead to potential censorship, implementing RFQ systems, which replace AMMs with professional market makers to provide fair pricing toned users and protocol changes. However, protocol changes, such as introducing concurrent leaders throughout the block production process to prevent one from becoming the target of MEV bots, will take years to implement. We might not have years to find ways to address MEV on Solana, as users quickly move away

once they're burned. Emerging solutions. Fortunately, MEV research on Solana has picked up, and while developers are working on protocol changes, there are plenty of things other network participants are delivering. Ellipsis Labs, for example, recently launched ITS first experimental sandwich-resistant AMM. Meanwhile, Titan's swap feature gives users more control with live updates that cuts the time it takes to execute a swap, reducing the attack surface by reducing expected slippage. JITA bundles are also used extensively to pro-Vita for their protection from searchers.

Another app layer approach is implementing dynamic slippage, where the Talos algorithm, powered by statistics and machine learning, adjusts in real-time to reduce negative slippage, where the Talos algorithm, powered by statistics and machine learning, adjusts in real time to reduce negative slippage. Lastly, mirroring how TradFy is kept in check through the social layer, Solanistakers could stir network behavior by staking their funds with validators that didn't engage in malicious practices. Simple, yet effective, a combination of stronger MEV protection, protocol layer changes, and social layer influence is a strong base for creating a better network for everyone involved. Only once Solana effectively addresses MEV can it truly shine as the mainstream blockchain it was designed to be.

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