bloxroute exploiting users for MEV

[python481516]

Bloxroute have been quietly onboarding validators and modifying their geth clients. They created API where several transactions can be put into a single atomic bundle and mined at the top of the block. This poses a serious threat to BNB chain by making it very centralized and vunlerable to censorship. They are collecting transactions from the network and from users directly via API, processing them and proposing blocks to validators via their own centralized relay. This means they can manipulate block content however they like as long as they pay enough fees to beat the default block built by geth. For example, they can decide to silence certain addresses or perfectly place their own transactions wherever they like in the block. Bloxroute will be the only ones who will have full access to all pending transctions, including the private ones.

What's even more worrying that BNB chain seems to support such actions. They are even merging this feature into the master branch:

#1648

This looks like a big step away from everything that blockchains stand for, things like decentralization and empowering users. I really don't believe that these were approved by CZ. Probably he has too many things on his plate and BNB chain doesn't get enough of his attention. In his blog post where he talked about principles he opened up with these: Be Fair, Build long term, Ethical. Unfortunately, it seems that Bloxroute somehow managed to convince BNB chain to go into another direction for short term gains.

[marrkee]

Agree, as I see it, bloxroute should not contain such a strong power over BSC chain especially knowing their history (failed BDN, which provides no benefit real benefit to traders and defo not to the validators, negative and shady reviews on twitter (bloxroutes backrunning without users consent) and many more
Also, this seems hypocrite, as this change is promoted as a way to split profit without affecting other bsc users, however it enables atomic sandwiching, frontrunning without competing in gas bidding (I could be willing to pay more, but trade with lower gas price is placed above me) and many other ways to exploit traders.

[Theo-]

We agree at Merkle that modifying clients for a specific proprietary software isn't what crypto should be. Sandwiches aren't good, and thanks to the closed set of validators on BNB, it can be contained by slashing validators that accept sandwiches.

However, a good MEV supply chain reduces spam and reduces gas fees for the average crypto user. BSC should have a MEV supply chain similar to Ethereum, while penalizing sandwiches.

[wellgamer789]

https://forum.bnbchain.org/t/mev-implementation-principles-within-bsc-for-discussion-purpose/1589

[python481516]

@Theo- slashing is not used for punishing validators engaged in sandwiching, nor it is going ever to be. Let's be fair here, users will continue paying the same gas price as before and will be sandwiched much more often. Validators won't benefit because bundle bribes will be a very small portion of what they normally make from fees. The only party that really benefits here is Uri and Bloxroute who managed to sell their story to BNB chain. They are the ones in the driver's seat. They will be one and only one central party that will see all the incoming transactions before they are mined and will have full power to manipulate blocks however they like. There will always be a trust question (as with any centralized system).

[decentralizedcitizen]

couldn't agree more with the concerns raised above.

bloxroute incentives are as clear as day. this has nothing to do with spam reduction or benefiting an average user. this company has questionable reputation to say the least and is simply trying to benefit from traders.

given cryptos decentralization ideology, introducing any centralized party is already harmful to the ecosystem let alone it being bloxroute.

[Theo-]

Validators won't benefit because bundle bribes will be a very small portion of what they normally make from fees.

This is a false assumption. Blocks are .5x more valuable on Ethereum with MEV relays. This is highly beneficial to validators.

Edit: typo

[python481516]

@Theo- can you tell us what sources you used or how you arrived to 5x multiplier?

A single validator on BSC collects around $20k/day from gas fees. You can easily verify this in different ways. For example, summing up total transaction fees of each block or checking how much BNB they are staking and what APRs they are offering. Now let's look at BNB48, they have been running their API services for months now. On July 16 (UTC time) they collected $20,993 in transaction fees (assuming BNB price is $247). Now take some other validators that don't run any MEV APIs, for example, Legend II made $24,946, Defibit made $19,083, etc. From this data you wouldn't even be able to tell which is better.

So validators will not benefit, Bloxroute will. I am curious what numbers they presented to them to convince them to get onboard.

[greyireland]

Obviously BSC access to fair MEV extraction is a trend. ETH’s flashbots have already done a demonstration. Without bloxroute, there will be other companies to do this

[Theo-]

@python481516 I fixed my typo.

Looking at a simple day is not fair, MEV is unevenly distributed, we'd have to look at the trailing 3 or 6 months for a good comparison. It's a fact that MEV produces more valuable blocks and lifts the APY for all stakers. As @greyireland mentioned, it's going to be done

The real question is how will this be achieved. We should learn from the pitfalls of L1 implementation (like sandwiches) and try to mitigate it.

[marrkee]

then why are we implementing half assed solution and allowing sandwichers to abuse users and "mitigate it later"? why cant we have a decent sandwich protection from day 1? if this gets merged, i am certain, that we will never have a solution for this.

[python481516]

@Theo- I ran my query for 6 months, here are the results (again assuming BNB price $247). Total transaction fees received by validators:

BNB48 - $4.82m
Legend - $4.79m

I still barely see any difference. Can you show us where you are getting your numbers from? Also, we can't simply assume that the effect we see on Ethereum will be the same on BSC. They have many different characteristics: block times, gas prices, variety of projects and so on.

Finally, our sub-discussion deviated from my original points. This issue was created to raise concerns about Bloxroute taking over the entire chain and making it as centralized as possible. Quite likely by manipulating facts and applying misleading sales strategies to convince BNB chain maintainers and validators.

[48ClubIan]

Just F.Y.I.

1. 48Club (also known as BNB48 before) is not running blox's solution.
2. Our mev solution respects gasprice order.
3. Our mev revenue is also distributed to delegators.

https://docs.48.club

[python481516]

@48ClubIan I am aware of all the points you mentioned but in terms of incentives and transaction fees collected your API has the same effect as Bloxroute's.

[python481516]

I noticed that a discussion started on Twitter too:

https://twitter.com/48ClubIan/status/1671197880114360320

Almost every bald statement Uri is making is false:

1. He claims that he is open sourcing their MEV feature. False: they are running closed source MEV relay and all the traffic will be routed through their black box.
2. He claims that validators will be able to receive blocks from anyone. False: Bloxroute will have total uncontested control what blocks they want to pass on to validators. Again, everything is routed through their proprietary centralized relay.
3. He claims that they respect gas price ordering. False: https://bscscan.com/txs?block=29317143 position 4 - 3 gwei, position 5 - 11 gwei.

He brags about building great blocks (even though their success rate is less than 15% on Ethereum). He finishes his posts with mocking gifs and sassy comments. This is arrogant, narcissistic, self-centered person who will be running the show on BNB chain. This is very sad time for blockchain community.

[0xdims]

BSC now is centralized blockchain by bloxroute.

[Jolly23]

#1728 take a look

[marrkee]

any updates on this? even more validators are joining, this is getting out of hand @brilliant-lx @guagualvcha
bloxroutes are not only exploiting users on chain, they are also exploiting searchers for access to submit bundles and participate in their "open" blocks submission.
outrageous centralisation and cashgrab

[sniperbnb]

any updates on this? even more validators are joining, this is getting out of hand @brilliant-lx @guagualvcha bloxroutes are not only exploiting users on chain, they are also exploiting searchers for access to submit bundles and participate in their "open" blocks submission. outrageous centralisation and cashgrab

better to just adapt than complain on here, their intentions are pretty clear, each week there is 1 or 2 new validators and in general validators are making more. Synclub validator joined and the next day they take 1st on the validator list above avengers,(not so relevant i know but the influence of the bloxroute mev program is clearly showing) the future is here it seems xD

[48ClubIan]

any updates on this? even more validators are joining, this is getting out of hand @brilliant-lx @guagualvcha bloxroutes are not only exploiting users on chain, they are also exploiting searchers for access to submit bundles and participate in their "open" blocks submission. outrageous centralisation and cashgrab

better to just adapt than complain on here, their intentions are pretty clear, each week there is 1 or 2 new validators and in general validators are making more. Synclub validator joined and the next day they take 1st on the validator list above avengers,(not so relevant i know but the influence of the bloxroute mev program is clearly showing) the future is here it seems xD

It's one thing for validators to adopt any solution, but a totally different one to merge into official repo.