MetaMask, the most popular crypto wallet for Ethereum, is introducing a new feature this week designed to help users avoid the consequences of maximum extractable value, or MEV.
The optional new feature, called Smart Transactions, allows users to submit transactions to a ‘virtual mempool’ before they are officially committed to the chain. According to Consensys, the company behind MetaMask, the virtual mempool will provide protection against certain species MEV strategies, and it will run behind-the-scenes simulations of trades to help users get lower fees.
MEV is additional profit that blockchain operators can extract from users by previewing or reordering transactions before writing them to the network, sometimes compared to the unsavory practice of front-running orders in traditional financial markets. MEV has a major impact on the way Ethereum works: it increases prices for users, slows down transaction speeds, and even causes transactions to fail under certain network conditions.
“Every year, $400 million is wasted on trade rollbacks, stalled trades, and blatantly predatory MEV front-running and sandwich attacks,” Jason Linehan, director of Consensys’ Special Mechanisms Group division, said in an interview.
“Everyone agrees it’s a huge problem,” Linehan says. “From a user experience perspective, the idea that you’re paying for a transaction that does nothing makes no sense.”
MetaMask’s solution – the virtual mempool – bears some similarity to a private mempool, which has become an increasingly popular strategy to ensure transaction privacy and protect against MEV. It is the platform’s first step in a much more ambitious roadmap CoinDesk reported earlier this year about a radical change in the way MetaMask routes transactions to Ethereum under the hood.
Read more: MetaMask’s secret project could turn the workings of Ethereum upside down
Private mempool services can sometimes raise centralization concerns because they allow intermediaries to execute transactions before publishing them to Ethereum. Consensys insists its virtual mempool is different and necessary to address Ethereum’s large hidden fees.
“We’re not going to try to take over Ethereum or anything,” Linehan said, “but there’s no way it’s going to be the foundation layer for the future of the global economy if it’s wasting $400 million of its users’ money every year. things that literally do nothing for them. That’s pure waste.”
How ‘Smart Transactions’ work
When a user tells a blockchain wallet to submit a transaction to a chain like Ethereum, they typically send that transaction to a public mempool – a holding area for yet-to-be-confirmed transactions managed by a decentralized network of bots and traders. “Block Builders” and “Searchers” work together to aggregate transactions into bundles called blocks, which are ultimately written to the blockchain’s digital ledger.
Builders and seekers scour the mempool looking for profitable trading opportunities and will sometimes reorder trades or squeeze their own trades into blocks to make extra profits for themselves. This phenomenon, “maximum extractable value,” can sometimes lead to higher fees, failed transactions, and delays for everyday blockchain users.
Metamask will use some of these same operators – builders and searchers – to power its virtual mempool. Unlike Ethereum’s public mempool, the builders and seekers of the virtual mempool will be financially punished if they fail to execute transactions at the prices MetaMask gives to users.
Linehan says that “95%” of builders and searchers currently using Ethereum have already signed up for the virtual mempool program, which will be rolled out in phases over the course of this week. A more limited version of the technology, ‘Smart Swaps’, has been available for several months.
The size of MetaMask’s virtual mempool network – combined with its transparent internal operations and new incentive program – makes it unique from conventional private mempools, Linehan said.
In addition to guaranteeing better prices for users, Linehan says the Smart Transactions feature will make it easier for users to track the progress of their transactions directly from MetaMask – something that would normally require users to visit a separate ‘block explorer’. website such as Etherscan.
Linehan describes Smart Transactions as a “concrete first step” toward MetaMask’s larger vision. “It lays down the tracks along which we could start building some of these other interesting use cases that people have been buzzing about in the future, like intent-based architectures.”
