Thread by @paddypisa

One of the best insights this year is the bandit attack (and more generally, miner extractable value) by @phildaian that may prove to undermine all DeFi.

It won't be exchanges stealing arbtitage moments, but miners who re-order tip of chain (or tx in their block)

Why is that a problem? Unlike exchanges where an authority can hold them accountable / eventually prosecute. Miners are distributed, pseudonymous and can just claim code is law. 🤷‍♂️🤷

And the financial incentives are very likely for them to do it, especially with GPU mining

And the rise of other blockchains.

I mean really, would you rather have 1 ether or 20 ether per block? If they crash the ether price, who cares since its GPU and they aren't locked in. They can sell profit and move to another high-value blockchain that relies on GPU mining.

There are a whole bag of worms here ready to get out. It is unique to blockchains where the end value is determined by ordering transactions and open-access to execution.

It may prove fatal or maybe miners remain altrusic forever & it never happens. Dunno, my morning thoughts.

In fact one thing to add is that this is a unique problem that pops up on Ethereum and smart contract platforms with permissionless block producers.

Bitcoin doesn't really have this problem unless someone is actively trying to bribe the miner.