Flashbots MEV R&D

Flashbots is a research and development organization formed to mitigate the negative externalities posed by Maximal Extractable Value (MEV) to stateful blockchains, beginning with Ethereum. Its stated approach has three prongs: "Illuminate" (bringing transparency to MEV activity and quantifying its impact), "Democratize" (open platforms that maximize competition and are freely available), and "Distribute" (sustainable distribution of residual MEV). The organization frames MEV as a measure of the profit a privileged protocol actor (miner, validator, sequencer) can make by arbitrarily including, excluding, or reordering transactions, and argues that superlinear returns from MEV extraction create economies of scale in block construction that push toward centralization — an outcome it labels an "MEV dystopia."

Flashbots operates two semi-autonomous "engines." Flashbots Product builds core infrastructure and ecosystem tooling for the block production supply chain and user protection; publicly maintained products include the MEV-Boost sidecar and MEV-Boost relay (out-of-protocol proposer-builder separation for Ethereum validators), BuilderNet (a block building network running on TEEs that shares MEV with the community), rbuilder (a Rust block builder), Rollup-Boost (a verifiable block-building platform for rollups), op-rbuilder (a Rust block builder for the OP Stack), Protect RPC (frontrunning protection with gas fee and MEV refunds), and MEV-Share (a protocol letting users, wallets and applications internalize the MEV their transactions create). Flashbots Research studies MEV market dynamics and blockchain design at the intersection of economics, security and cryptography, operating through in-house work plus an open Flashbots Research Proposals (FRP) process modeled on the Ethereum Improvement Proposal process and funded by MEV Fellowship Grants, alongside published research writings and a public research problem database.

Third-party analysis from 2023 characterized Flashbots as the epitome of "ancillary participants" in MEV — providers of products and services that are neither validators/proposers nor searchers — and as the market front-runner, while questioning value accrual to the entity itself.

Founding story

According to the company, Flashbots originated in 2020 when a group of concerned blockchain researchers, builders and whitehats came together to mitigate the negative externalities posed by MEV to stateful blockchains, starting with Ethereum, initially by building open-source software that quantifies MEV.

Business model

Flashbots distributes its core software (including MEV-Boost) as free, open-source infrastructure used by validators, builders, searchers, wallets and applications; research is conducted in-house and through an open proposal process funded by grants. Third-party analysis published in March/April 2023 stated that no revenue had accrued to the Flashbots entity itself at that time, describing it as a "feature of Ethereum" rather than a monetizable product, and speculated about potential future monetization routes such as turning on a fee switch or launching a token associated with SUAVE.

As of the March/April 2023 third-party analyses, no revenue was reported as accruing to Flashbots itself despite roughly $700M in MEV revenue generated for validators and searchers; monetization paths discussed externally (not confirmed by the company) included a fee switch or a SUAVE token.

Traction

Company materials report that mining pools accounting for more than 84% of Ethereum hashrate had adopted MEV-geth by April 2021. A 2023 external analysis reported approximately 91% of blocks used MEV-Boost over the preceding 14 days, that MEV-Boost increased validator/proposer block rewards by about 60% (roughly $250M in incremental gross profit for validators), and about $450M in gross searcher profit, for roughly $700M in combined MEV revenue for searchers and validators.

Latest developments

Current publicly maintained products listed by the company include BuilderNet, a TEE-based Ethereum block building network that shares MEV with the community; rbuilder and op-rbuilder, Rust block builders (the latter for the OP Stack); and Rollup-Boost, a verifiable block-building platform for rollups with modular components addressing performance, programmability and decentralization.