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Paradigm Team Introduces MEV Taxes to Capture MEV on OP Stack L2s and L3s, Solana, and Ethereum

Jun 4, 2024, 05:24 PM

The Paradigm team, including Dan Robinson and Dave White, has introduced a new mechanism called MEV taxes. This technique allows arbitrary applications to capture their own Miner Extractable Value (MEV) while preserving composeability. The mechanism can be implemented on OP Stack Layer 2 and Layer 3 solutions such as Optimism, Base, and Blast L2. MEV taxes leverage the power of priority ordering to enable applications to capture a significant portion of MEV. For instance, an application charging searchers a $99 MEV tax for every $1 of priority fee can capture 99% of the competitive MEV for that transaction. MEV, as a percentage of DEX volume, is 0.16% on Solana and 0.087% on Ethereum. This approach is expected to drive substantial network revenues, with projections of $8 billion in Solana network revenues by 2030.