Fundamentals of Efficiency, Safety, Security, Fairness at Issue

June 24, 2024 – The Proof of Stake Alliance (POSA) today introduced a core set of definitions and principles around MEV, encouraging those engaged in block construction and proposition to coalesce around a core understanding of key concepts. The paper seeks to explain how block construction on public blockchains works, as well as the various incentives that motivate behavior in the market for blockspace, knowing that consistent and informed practices industry-wide can help to ensure blockchain networks are not only secure and efficient but also safe.

MEV (sometimes referred to as “miner extractable value” or “maximal extractable value”) refers to the maximum value that can possibly be realized from a given block as a result of the most optimal and efficient contents and order of messages within that block. By this definition, MEV is generated by the users of a blockchain network based on where, when, and how they transact and submit messages to the network.

Building on the staking industry principles released in 2023, the MEV guidance and principles were developed by industry organizations, independent researchers, and external counsel. As the leading organization advocating for participants in growing multi-billion dollar proof of stake ecosystems, POSA is now calling on other stakeholders to review the principles in order to then agree on them and encourage adoption. POSA will accept feedback and comments on the document, which seeks to guide the industry toward an understanding of the role of block construction and proposers on public blockchains, until July 15, 2024. 

“The evolution of MEV strategies reflects the ongoing maturation of public blockchains and the digital ecosystems they support,” said Alison Mangiero, Executive Director of POSA. “As these strategies become more sophisticated, they not only test the resilience and adaptability of existing legal frameworks but also highlight the need for a nuanced understanding of blockchain economics. The paper explores developments in MEV as a critical component of blockchain innovation and considers the implications of these developments.  It is our hope that during this public comment period, the community – both technologists and legal and policy experts alike – provide the feedback necessary to strengthen these core definitions and principles.”  

“Fair market principles are fundamental to sustaining the flourishing blockchain environments,” said Angela Angelovska-Wilson, POSA board member and the Managing Partner of DLx Law. “By continuing to work closely with legislators, regulators, and industry stakeholders, we help ensure blockchain technologies can reach their potential. By coalescing around a core set of fair market principles, we can protect the users of these technologies while safeguarding the flexibility that blockchain developers have to continue to introduce and improve new networks and systems without inflexible or burdensome restrictions that could otherwise hinder the industry’s progress.” 

The POSA MEV definitions and principles can be found here and below. Interested parties can send comments to: hello@proofofstakealliance.org 

MEV Principles PDF