A State Merge-based Proposer-Builder Separation for Mitigating Maximum Extractable Value Threats in State Sharding

Abstract

Maximum Extractable Value (MEV) refers to the maximum benefit obtained from the Decentralized Finance (DeFi) protocol during the block production process by utilizing the power of transaction ordering in the block. Although MEV plays a role in incentivizing the efficiency of DeFi projects, excessive abuse of this power can pose a series of problems and challenges to the blockchain, including an increased risk of chain forks. The State Sharding technique can fundamentally enhance the scalability of blockchain, but its consensus security also faces the potential threat of MEV. To mitigate the negative impact of MEV on state sharding, a scheme combining the Proposer-Builder Separation (PBS) and the State Merge is proposed. This scheme allows high-performance nodes to synchronize the state of adjacent shards and form a higher-level virtual shard, establishing a logical relationship resembling a complete binary tree among the shards. And through role separation, nodes participate in consensus within a leaf shard and composite virtual shards. At the same time, they can participate in block construction and seize MEV opportunities in other shards that are already synchronized. By confining transaction ordering authority outside the consensus shards, the security risk to the State Sharding consensus network from the MEV is reduced. However completely eliminating the MEV threats is very difficult and requires further research. Analytical and simulation-based validation shows that the proposed approach can mitigate the issue of decreased resistance to censorship and incentivize nodes to fully utilize their performance by leveraging MEV opportunities, thereby improving the blockchain's throughput capacity.