Background
The MEV Committee is a grants-funded initiative to help the community enforce a social mitigation strategy against malicious block proposers. The committee was assigned to actively monitor, analyze, and report any potential MEV activity, so that the community may respond appropriately to bad actors.
All reports are shared with the community, offering insights into our on-chain findings, actions taken to address any issues, and improvements to our workflows. In case of malicious activity, these reports also detail the incident, the parties involved, and provide recommendations for any retroactive measures the community should consider. We welcome any feedback or questions on the report!
Last three months activity
The last couple of months have been useful for us as a stress test of the reduced validator set when coupled with high market volatility during a sustained period of time. We have not identified any sign of misbehavior activity by any of the validators.
It is worth noting that minor performance discrepancies were observed within the designated proposer set. The relevant proposers have been notified and are actively working towards resolving the configuration improvements needed. This is not indicative of any malicious activity, but rather a routine matter of node optimization.
Empty Blocks and average discrepancies
As we have been doing in previous reports, when looking at empty blocks (which involves validators proposing blocks with no matched orders) we see that the performance by all the validators in the designated set has increased dramatically, now showing no difference between validators.
When examining trending averages for orderbook discrepancies across validators, we observed that all validators are behaving accordingly, except during February, where we see a moderate rise in the average order book discrepancy per block of all validators in the designated set.
The order of magnitude is way lower than what we were seeing months ago, but have been reviewing this data to increase performance in the future.
High Discrepancy Blocks
Again, during the last three months, we identified a few blocks with above-average orderbook discrepancies. However, after analysis, none appeared to result from malicious activity.
Additionally, we’ve been performing the same analysis we did in the past, where, on top of the previously discussed metrics, we cross check if there’s any validator favoring or penalizing specific traders. This, coupled with all the metrics we check and block sampling when analyzing single block discrepancies, allows us to confirm we detected no signs of misbehavior.
Actions taken
We’ve waited a prudential time after our conversations with the relevant proposers within the designated set to make sure their node was optimized after the mentioned discrepancies, and we can safely say that they have returned to the expected values, further emphasizing that communication and monitoring is key.
Future outlook
The committee will continue refining its ability to detect discrepancies, engage with validators, and develop new metrics to uncover underlying issues. Feedback and collaboration from the community are vital as we work towards a more secure and equitable dYdX ecosystem.