Quantifying MEV on L2s

Is there any research on quantifying MEV on L2 chains? (Polygon, Arbitrum etc)
We know that on L2s, without the existence of flashbots, most MEV resolves into PGAs. It would be interesting to see some metrics around the quantity of MEV being extracted and the split between validator/searcher.

I think there is one report by @Quintus here.

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That’s quite outdated and not very helpful honestly. I’m sure there are better resources

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RE Polygon: “The main reason we sourced this data from another party is that,
due to Polygon’s block size and rate, simulating and tracing transactions can
be executed at only slightly faster than the network speed, making this a very
expensive process (note: event-based tracing significantly improves this process,
but it still remains expensive).” This could be resolved by having multiple servers doing different sequences of blocks couldn’t it @Quintus?

RE Arbtrium: “Unfortunately, at this time, Arbitrum does not provide tracing of transactions.” I think they now do, it would be interesting to use the mev-inspect-py fork there to conduct some research.

Have not seen anything up-to-date or comprehensive but v interesting to see what it looks like. Will post here if I find anything more recent

I have seen some evidence of tons of spam transactions being a dominant strategy on L2s due to their increased throughput and lower transaction fees. I believe there is certainly a research opportunity regarding MEV on L2s. It differs case-by-case because each L2 usually differs greatly. Lately, I have been reading about the aquitas protocols and the FSS from Ari Juels and chainlink. I am not sure whether or not I align with the approach but I also know that arbitrum has mentioned they want to use this service for the network sequencers as Ed Felton and Ari are both colleagues and have done work together in the past.

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fyi we (Flashbots) are happy to give a grant for any data efforts to quantify MEV on L2s! and to build on top of @Quintus’s work (basically porting mev-inspect-py to an L2).

will also note a relevant resource – Marlin’s MEV dashboard, using mev-inspect to quantify MEV on Polygon https://explore.marlin.org/

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If I recall correctly the issue was that you need to know the state at the start of a block to be able to replay it and the only good way of accessing old state was recreating it by executing the blocks that came before

It’s an issue across all the low gas utilization, high throughput chains. Thus far, the crude solution seems to be to set gas price floors (present on most L2s and sidechains).

FWIW – I think studying Solana + Jito Labs might be interesting/relevant here, given some similarities in blockspace fee markets (oversupply of blockspace, low unit prices, likely more gas-price sensitive end users, more informal MEV markets etc) to L2s, which may in turn affect the shape and form MEV takes (dominant strategies, value accrual, etc)

And yeah you’re totally spot-on re:how different L2s are choosing to tackle MEV. May result in a diverse set of localized MEV ecosystems. Or potentially favor cross-chain searchers and builders who are capitalized well-enough to do “netting” across layers (similar to how cross-border remittances or cross-CEX arbs work).

Going to look around on L2 research forums + ask around to see if anyone has attempted to quantify this :saluting_face:

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I haven’t looked too much into Jito labs as I am hesitant about the Solana ecosystem. Still, from your recommendation, perhaps there is value in drawing a unique comparison in their approach to benefit the greater ecosystem. I recently saw some PRs on the Flashbots research GitHub that might be interesting to you. Perhaps there is room to collaborate there? Also, Ed made this post in the arbitrum discussion forums about 10 days ago that is relevant. Ed was a co-author of the Flashboys paper and a founder of the arbitrum network.

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Some people have mentioned spamming so this report on a spamming strategy on polygon may be interesting:

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This is fascinating, thanks for sharing @Quintus. I wonder if there’s a cutoff point after which this type of strategy (more like spam & griefing) isn’t really economic anymore?

For some quick reference stats, here’s the USD-denominated gas fees for a simple WETH<>USDC swap on uni v3 across various chains at the time of writing this post:

  • Ethereum L1 = $1.94
  • Polygon PoS = <$0.01
  • Optimism = $0.09
  • Arbitrum One = $0.59

Solana DEX spot swaps are also effectively priced as “gas” free.

Suppose this does make the case for setting minimum (non-zero) base fees.

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