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Foundation

Maximum Extractable Value (MEV) is a general phenomenon. It can occur anywhere it takes time to communicate.

One of the first known exploits in the modern era took place in 1834 between Bordeaux and Paris. Communication is never instantaneous (leaving aside quantum entanglement for now), and those who receive information first have an advantage because they can act prior to anyone else, giving them greater ability to extract value from it.

There is a deep link between time, information, value, meaning, and power. If we investigate the intersection between informtation theory and economics, we can make a case that information is the new money. Money is a verifiable record for the quantification, storage, and/or exchange of value just as information quantifies, stores, and/or communicates meaning.

Moreover, time seems to be like money because there is a duration between receiving information, assessing its value, and constructing meaning. Duration advantages those who receive information first, or can act on it most quickly. Advantage means that power accrues to more sophisticated experts over time, often in the form of more money. If the way we communicate–and the media we use–do not account for this in their design then they tend to be unfair, resulting in the centralization of power irrespective of how they function.

We seek to understand MEV from first principles and so we will assess the above outline through three different lenses:

  1. Communication theory (valuable information and meaningful communication).
  2. Mathematics (what is actually fair?)
  3. Politics (power and the problems of the public)

Goals​

This section of our documentation is discussion-oriented. It is intended for all of you who feel like you really should read all those academic papers on arXiv, and have them open somewhere in your tabs, but somehow never seem to get to them.

We want to study MEV from first principles, but with less proofs and more relatable language. This means that what we say here will be more contentious than our research papers, precisely because it is intended to get you thinking and discussing the ideas with other people.

This section does not present answers, or the "right" way of thinking about MEV. It presents interesting and different ways to think about what MEV really is and why it matters.

SUAVE specifics​

If you read the welcome page, you will see that SUAVE is specifically intended to create an open marketplace for mechanisms.

Well designed mechanisms for the exchange of information can help ensure that honest actors profit more than dishonest ones, aligning our incentives around shared ownership rather than private economies of scale.

SUAVE is our attempt to empower users and maximally decentralize public blockchains by providing "unified infrastructure for diverse expressions of value". We ask that you discuss the validity of this phrase through the three core claims we'll make in this section:

  1. People should be able to participate in the value they create by virtue of the way information about their intentions is acted on.
  2. To do this, we must anticipate how our messages move through our media so that no-one is unfairly manipulated.
  3. This amounts to programming money (and the power associated with it) in increasingly democratic ways.

General application​

There are many reasons why we think the market will evolve toward many chains sharing a unified sequencing layer which is specifically intended to keep power meaningfully decentralized in each specific chain:

  1. Block builders who only operate on a single domain will find themselves increasingly disadvantaged due to cross-domain MEV.
  2. There are efficiency gains for users from aggregating and clearing their preferences inside the same auction.
  3. The credible neutrality of an open marketplace in which many parties share their views, strategies, and opinions gives SUAVE an information advantage on centralized builders.
  4. Enabling computation on sensitive data (user orderflow) in a permissionless setting is hard. By solving it once, we can amortize the cost across the ecosystem and provide better solutions more cheaply than any individual participant could.
  5. Because of how fundamental transaction sequencing is in blockchains, only another decentralized system can provide the necessary security and credible neutrality.

Building unified infrastructure for expressing diverse values is the best way to give domains control over their own validation guarantees and to ensure smaller domains stay decentralized in the face of centralizing economic forces outside their control.

Why?​

This section is structured as above because MEV is a general phenomenon. Much of the activity around MEV in blockchains so far has been characterised by bots built to exploit short-term opportunities.

However, the point here is that MEV will never be "solved". We can only find increasingly more fair ways of accounting for it as our media evolve. Once you understand this, the incentive is not to learn how to exploit short-lived opportunities, but to refine your fundamental understanding such that you can always participate in the value that is created whenever any intentional being interacts with the world.