Applied MEV protection via Shutter's threshold encryption

"MEV is especially notorious on Ethereum, where it continues to be extracted at a rate equivalent to 11% of block rewards. Data shows that nearly $300,000 was lost in sandwich attacks in September. This reveals that MEV is a recurring hidden fee, not a minor inefficiency, hitting large trades hardest in volatile markets."

"Threshold encryption is a cryptographic technique that splits the decryption key across a committee of keyholders so no single party can decipher a transaction on its own. In most threshold encrypted mempools, the committee first runs a Distributed Key Generation (DKG) process to produce a public key as well as private key shares for each member."

"These techniques encrypt transaction contents before they enter the mempool and keep them concealed until the ordering of transactions is finalized. This keeps block producers from extracting MEV by manipulating the sequencing of transactions. However, most encrypted mempool architectures are at the research stage."

MEV, or maximal extractable value, represents a significant hidden cost on blockchains where block producers and other actors extract value by controlling transaction order and inclusion. This problem stems from public mempools that expose pending transaction data, enabling frontrunning and sandwich attacks. On Ethereum, MEV extraction equals 11% of block rewards, with sandwich attacks alone causing nearly $300,000 in losses during September. Threshold encryption protocols like Shutter address this by splitting decryption keys across committees, encrypting transactions before mempool entry and keeping them concealed until ordering is finalized. Shutter is the only threshold-based approach currently deployed on mainnet, specifically on Gnosis Chain.

Read at Cointelegraph