Ethereum Researchers Develop Threshold Encryption System to Mitigate MEV Attacks

Researchers have proposed a new cryptographic approach to mitigate MEV attacks on Ethereum called Flash Freezing Flash Boys (F3B). The system uses threshold encryption to protect transaction data, ensuring that each transaction remains confidential until it reaches finality. This is in contrast to earlier systems, which relied on per-epoch setups and exposed sensitive data to validators.

The F3B protocol addresses the limitations of these early systems by applying threshold encryption on a per-transaction basis. This approach ensures that each transaction is encrypted with a key that only the designated Secret Management Committee (SMC) can access. The SMC prepares decryption shares, but withholds them until the consensus commits the transaction.

Two cryptographic protocols can be used to implement F3B: TDH2 and PVSS. The difference between these protocols lies in who bears the setup burden and how often the committee structure is fixed. While TDH2 is more efficient due to a fixed committee, PVSS gives users more flexibility but comes at a higher computational overhead.

Prototypes of F3B on simulated proof-of-stake Ethereum showed minimal performance overhead, with delays incurred after finality ranging from 197 ms to 205 ms. Storage overhead was also low, at just 80 bytes per transaction for TDH2. However, the deployment of F3B is hindered by the complexity of integration with the Ethereum network.