MEV Protection Strategies for DeFi Protocols

What is MEV?

Maximal Extractable Value (MEV) refers to the profit that can be extracted by reordering, inserting, or censoring transactions within a block.

Common MEV Attacks

Front-running: Inserting transactions before profitable trades
Back-running: Following profitable transactions
Sandwich attacks: Surrounding victim transactions
Liquidation sniping: Racing to liquidate positions

Protection Strategies

mev-protection.sol

// Commit-reveal scheme for MEV protection
mapping(bytes32 => uint256) public commits;
 
function commit(bytes32 hash) external {
    commits[hash] = block.number;
}
 
function reveal(uint256 amount, bytes32 secret) external {
    bytes32 hash = keccak256(abi.encode(msg.sender, amount, secret));
    require(commits[hash] != 0, "No commit");
    require(block.number > commits[hash] + 1, "Too early");
    // Execute protected action
}

Private Mempools

Use Flashbots or similar services

Commit-Reveal

Hide transaction details until execution

Slippage Protection

Set appropriate slippage tolerances