How Batched Threshold Encryption could end extractive MEV and make DeFi fair again

"Batched Threshold Encryption (BTE) builds on foundational concepts such as threshold cryptography, which enable secure collaboration among multiple parties without exposing sensitive data to any single participant. BTE is an evolution of the earliest TE-encrypted mempool schemes, such as Shutter, which we have covered previously. For now, all existing work on BTE remains at the prototype or research stage, but it could shape the future of decentralized ledgers if successful."

"On most modern blockchains, transaction data is publicly viewable in the mempool before it is sequenced, executed and confirmed in a block. This transparency creates avenues for sophisticated parties to engage in extractive practices known as Maximal Extractable Value (MEV). MEV exploits the block proposer's ability to reorder, include or omit transactions for financial gain. Typical forms of MEV exploitation, such as frontrunning and sandwich attacks, remain pervasive, particularly on Ethereum, where, during the flash crash on Oct. 10, an estimated $2.9 million was extracted."

Batched Threshold Encryption adapts threshold cryptography to encrypt pending transactions collectively so multiple parties can collaborate without exposing sensitive data to any single participant. BTE is an evolution of early TE-encrypted mempool schemes like Shutter and currently exists at prototype or research stage with potential to influence decentralized ledgers. Public mempool visibility enables Maximal Extractable Value by letting proposers reorder, include, or omit transactions for profit. Common MEV exploits include frontrunning and sandwich attacks; the Oct. 10 flash crash extracted an estimated $2.9 million. Measuring MEV is difficult because many attacks are privately relayed and some use hundreds of chained subtransactions. Encrypted mempool designs hold transactions until finalization, and threshold encryption splits a secret key among servers so a quorum must combine shares to unlock data, analogous to a multisig.

Read at cointelegraph.com