This EVM-compatible blockchain seeks to annihilate toxic MEV

New EVM-compatible blockchain seeks widespread adoption of blockchain-based products with its MEV-resistance feature.

The possibility of miners or validators manipulating block data poses an obstacle to the widespread adoption of blockchain-based products. In response, Neo has launched its new sidechain, Neo X, which aims to tackle MEV attacks to offer a secure platform that fosters trust and drives innovation in the blockchain industry.

Short for miner or maximal extractable value, MEV is a pivotal concept in the blockchain space, representing miners’ and validators’ methods to enhance their earnings through transaction manipulation. This manipulation power sometimes paves the way for MEV attacks, where miners take advantage of their positions and place their transactions in front of users, for example, or purposely hold back the publication of completed blocks.

The exploitation of MEV has been central to several high-profile incidents across many blockchain platforms. One such instance involved an MEV bot linked to the Curve finance hack, which executed a heist of a staggering $61 million. In another example, a Solana MEV bot extracted $1.7 million using the Dogwifhat token. Additionally, an exploit targeting sandwich trading bots resulted in a loss of $25 million.

MEV attacks threaten the decentralized and transparent ethos of blockchain, creating significant fairness and security issues in the DeFi space. An EVM-compatible sidechain addresses the challenge of MEV attacks and offers a secure platform that fosters trust in the blockchain industry.

MEV-resistant blockchain

Neo, an open-source and community-driven blockchain platform designed to welcome developers into the Smart Economy, has taken a proactive stance by introducing its EVM-compatible sidechain Neo X.

EVM, short for Ethereum Virtual Machine, refers to the technology that allows Ethereum to run decentralized applications (DApps) and smart contracts. Sidechains, on the other hand, running alongside the main chain, help expand the utility of the main network by operating as independent – but interoperable – blockchains.

Neo enables developers to digitize and automate asset management through its robust smart contracts. It can integrate with common programming languages and tools, meeting developers where they are and providing the most feature-packed blockchain platform for building full-stack DApps. Neo offers full native support for robust infrastructure, including decentralized storage, oracles and domain services.

How the Neo X chain achieves MEV resistance. Source: Neo

In combating MEV attacks, Neo X introduces two innovative features, targeting consensus mechanism exploitation and transaction manipulation.

First, the dBFT consensus mechanism, pioneered by Neo, eliminates toxic MEV from the protocol level, preventing miners or validators from compromising the block generation process. It ensures that no consensus nodes, in their rational mind, would withhold the block-producing process, and once a block is generated, there is no room for transaction rearrangement.

Secondly, Neo X utilizes a combination of two classic cryptography tools, Distributed Key Generation (DKG) and threshold encryption/decryption, to encrypt and decrypt transaction information. This ensures that transaction processors cannot see inside the transactions, forcing miners and validators to process all transactions neutrally. This combined method is known as enveloped transactions. Similar to the transition from HTTP to HTTPS, it adds security and protects the information and the user, providing the network infrastructure for fair and orderly transactions.

Addressing the challenges of MEV attacks, Neo founder Da Hongfei highlighted their significant financial implications. “Toxic MEV is a huge problem for the blockchain industry, with figures showing billions being lost to malicious miners and validators who overstep their responsibilities,” he said.

Neo Founder Da Hongfei recently announced the EVM-compatible sidechain at the finale of the Neo APAC Hackathon in Hong Kong. Source: Neo

Da stressed the importance of the Neo X sidechain integrating enveloped transactions with Neo’s dBFT consensus mechanism, which is crucial in safeguarding users; “Through this integration, we can ensure the utmost in user protection and retain the security required to ensure the successful growth and adoption of blockchain.”

The burgeoning field of blockchain technology

Beyond improving security with Neo X’s MEV-resistant feature, Neo aims to develop the most compatible and developer-friendly blockchain infrastructure through its N3 protocol. Neo’s ecosystem aims to include the tools developers need by supporting multiple virtual machines and programming languages.

Introducing an MEV-resistant sidechain like Neo X signifies a crucial advancement in addressing these pivotal security issues. Developers and users, reassured by the increased security and fairness, are more likely to explore and contribute to the burgeoning field of blockchain technology, paving the way for a richer, more diverse and innovative blockchain landscape.