Regulation and Blockchain: Building a Fair and Orderly Encryption Ecosystem

In any healthy market, regulation is an essential cornerstone. Financial regulation ensures the smooth exchange of capital, antitrust laws restrain rent-seeking behavior, and intellectual property laws encourage innovation. In the world of Blockchain, code is law, and those who write the code effectively assume the role of legislators.

This power is particularly evident at the very bottom of the blockchain architecture - among block builders. The parties responsible for competing to build blocks directly influence the success or failure of the blockchain. If block production stagnates or incentive mechanisms encourage predatory behavior, the integrity of the entire blockchain will face collapse, and users will follow suit. For example, a certain blockchain once faced a system interruption, causing users to be unable to perform any transaction operations, including all activities related to depositing and withdrawing tokens being forced to pause.

The responsibility of block builders is to select transactions from the memory pool and assemble them into blocks, which are then propagated to other nodes in the network to reach consensus on the blockchain state. How various parties interact during the block building process in different systems depends on the teams that design these systems. In the Ethereum ecosystem, one company dominates. On another public chain, another company holds the top position. Meanwhile, in the upcoming new public chain, new participants will play a key role.

MEV and MEVA: New Challenges in the Blockchain World

In the industry, "MEV" (Maximum Extractable Value) is used to summarize the problems these companies are committed to solving. In short, individuals responsible for ordering transactions within a Block have the incentive to maximize their own profits, which may lead them to maliciously reorder transaction sequences, increasing their own profits while raising costs for users.

The Miner Extractable Value Auction Infrastructure (MEVA) aims to address issues such as the stability, competitiveness, and degree of decentralization of gas fees. Its core lies in the design of the incentive mechanism: stakeholders will take actions if they receive economic returns due to positive externalities (or the elimination of negative externalities) generated in block construction. However, achieving a perfect balance is not easy.

On a mainstream public blockchain, the block time is approximately 12 seconds, and all participants have the opportunity to access and simulate all transactions to optimize their own profits. Taking this into account, the current best practice is to adopt the Proposer-Builder Separation (PBS) model. This setup divides the entire process into five roles: users, block producers, relayers, block proposers, and seekers. By separating block rewards among multiple stakeholders, all parties are incentivized to share information, thereby enabling competitive block construction while ensuring that blocks remain profitable (minimizing failed transactions).

However, this model also has its problems. Block production has shown a trend of centralization, with the top two builders capturing more than half of the value. Additionally, some applications have realized that they can self-capture MEV through mechanisms like MEV taxes, allowing them to participate in the transaction ordering process and reclaiming value that would otherwise flow to the block proposer.

Innovation and Challenges of the New Blockchain

A new public chain set to launch is expected to become the most powerful EVM-compatible layer one network, capable of processing 10,000 transactions per second, with a block time of only 1 second, featuring single-slot finality and low hardware requirements. One of the key innovations to achieve this goal is the separation of the execution layer and the consensus layer, allowing the current block to run its consensus process while executing the previous block. The project has raised $225 million and is seen as the next important layer one public chain, currently accumulating over 300,000 followers on social media.

This innovative architecture brings three main design challenges:

1. Uncertainty of state: Since the execution of the previous Block has not been completed before the next Block reaches consensus, there is no "current" state.

2. Simulating a complete Block within a limited time window: The uncertain state and 1-second block time mean that block builders may not have enough time to simulate a complete transaction Block and optimize the order to maximize profit.

3. Uncertainty in execution: The probabilistic nature of transaction ordering may lead to transaction bundles being reversed on the chain, increasing the transaction failure rate and harming user interests.

To solve these issues, it is necessary to design an architecture that ensures both a low transaction failure rate and that block builders can be profitable.

Emerging MEVA Solutions

To address these challenges, a project focused on MEVA is under development. The team members have extensive industry experience, including backgrounds in high-frequency trading, quantitative hedge funds, and top encryption companies.

The project plans to use its infrastructure to launch liquidity staking services for platforms running MEVA. This model has precedents on other public blockchains, allowing users to stake tokens and receive a portion of the validator rewards.

Once the testnet of the new public blockchain is launched and some final integrations are completed, the project will launch a liquidity staking protocol on the testnet. They also plan to release the initial version of the MEVA system during the testnet period, focusing on:

• Guide seekers and Block builders to participate in Block space auctions
• Promote validator experiments and stress test client software

Designing MEVA is a fundamental component of any Blockchain internal pipeline. The super-parallel EVM architecture of the new public chain brings new possibilities to the ecosystem, but it also requires continuous innovation to ensure a good user experience and a profitable Block building model.

During the testnet phase, the project team invited various parties to participate in testing and provide feedback, preparing for the mainnet and future development roadmap, including protecting the RPC against sandwich attacks and developing an analytics dashboard.