Solana-based DeFi platform Marinade Finance has unveiled a series of governance proposals aimed at addressing the risks posed by unchecked Maximal Extractable Value (MEV), with the goal of safeguarding decentralization and ensuring the long-term health of the Solana ecosystem. The proposals, posted on the Marinade community forum on December 11, are designed to manage MEV and counteract the potential negative impacts of malicious validators.
MEV refers to the value that can be extracted by miners or validators through the strategic ordering of transactions within a block. While MEV can optimize liquidity, improve price discovery, and reward validators, it also opens the door to harmful practices such as sandwich attacks, front-running, and the centralization of network control.
In an email to crypto.news, Michael Repetný, CEO of Marinade Finance, stressed the importance of balancing MEV’s benefits with the need to maintain decentralization, transparency, and innovation in blockchain ecosystems. “While MEV cannot be entirely eliminated, its impact can be managed, and its value can be distributed more equitably,” said Repetný.
Challenges and Risks of Malicious MEV Activity
Repetný explained that during a recent stake auction held by Marinade, validators were able to place significantly high bids for rewards, which was made possible due to the transparent nature of the system. However, the lack of proper data made it difficult for Marinade to distinguish legitimate validators from those engaging in malicious MEV activities, such as exploiting transaction sequencing for personal gain.
In response, Marinade Finance has proposed a three-pronged approach to address these challenges and protect the integrity of the Solana network.
1. Formation of a Public Committee to Monitor Validators
The first proposal calls for the creation of a public committee tasked with overseeing validators’ actions. This committee will work to identify malicious actors who engage in harmful MEV practices. Once such validators are identified, their PSR bond (Performance Staking Rewards) will be reduced as a deterrent, helping to curb future malicious activity and promote a healthier, more secure network.
2. Reopening the Public Mempool for Decentralized MEV Access
The second proposal focuses on reopening the public mempool, which would allow more decentralized access to MEV opportunities. Marinade argues that public mempools offer a fairer distribution of MEV opportunities compared to private mempools, which are more likely to centralize access and give an unfair advantage to a select group of participants.
3. Research Fund for Solana MEV Trends and Solutions
The third proposal involves allocating funds from the Marinade DAO (or MNDE DAO) to conduct research on MEV trends, risks, and mitigation strategies. This research initiative will focus on understanding the potential dangers of MEV, exploring solutions to minimize harmful MEV, and developing tools that make the process more transparent and inclusive.
The results of this research will be used to guide future governance decisions and inform the development of policies and technologies to improve the Solana ecosystem’s resilience and fairness.
Prioritizing Research for Long-Term Solutions
Repetný emphasized that prioritizing research into MEV is crucial for the future of the Solana ecosystem. Understanding the risks and trends of MEV will help developers identify vulnerabilities and create effective solutions to mitigate its negative effects. By addressing these issues proactively, Marinade Finance hopes to promote a more decentralized, transparent, and secure blockchain environment.
Marinade’s governance proposals reflect an increasing focus on safeguarding the integrity of the Solana network as the DeFi ecosystem continues to evolve. Through careful monitoring of validators, decentralized access to MEV, and ongoing research, Marinade aims to ensure that Solana remains a secure and efficient platform for decentralized finance.
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