Flash Freezing Flash Boys: Per-transaction encryption to fight malicious MEV

Malicious MEV attacks pose a significant threat to traders on Ethereum. Our latest research

Incentives and punishments in the Flash Freezing Flash Boys protocol

F3B incentivizes honest behavior among Secret Management Committee trustees through a staking mechanism with locked collateral. Fees motivate trustees to stay online and maintain the level of performance the protocol requires. A slashing smart contract ensures that if anyone submits proof of a violation, which demonstrates that decryption was performed prematurely, the offending trustee’s stake is forfeited. In TDH2, such proof consists of a trustee’s decryption share that can be publicly verified against the transaction ciphertext. Meanwhile, in PVSS, the proofs consist of a decrypted share together with a trustee-specific NIZK proof that authenticates it. This mechanism penalizes provable premature disclosure of decryption shares, increasing the cost of detectable misbehavior. However, it does not prevent trustees from colluding privately off-chain to reconstruct and decrypt transaction data without publishing any shares. As a result, the protocol still relies on the assumption that majority of committee members behave honestly.

Because encrypted transactions cannot be executed immediately, another attack vector is for a malicious user to flood the blockchain with non-executable transactions to slow down confirmation times. This is a potential attack surface common to all encrypted mempool schemes. F3B requires that users make a storage deposit for every encrypted transaction, which makes spamming costly. The system deducts the deposit upfront and refunds only part of it when the transaction executes successfully.

Challenges to deploying F3B on Ethereum

Flash Freezing Flash Boys offers a comprehensive cryptographic approach to mitigating MEV, but it is unlikely to see real-world deployment on Ethereum due to the complexity of integration. Although F3B leaves the consensus mechanism untouched and preserves full compatibility with existing smart contracts, it requires modifications to the execution layer to support encrypted transactions and delayed execution. This would require a far broader hard fork than any other update introduced since The Merge.

Nevertheless, F3B represents a valuable research milestone that extends beyond Ethereum. Its trust-minimized mechanism for sharing private transaction data can be applied to both emerging blockchain networks and decentralized applications that require delayed execution. F3B-style protocols can be useful even on sub-second blockchains where lower block times already significantly reduce MEV, to fully eliminate mempool-based front-running. As an example application, F3B could also be used in a sealed-bid auction smart contract, where bidders submit encrypted bids that remain hidden until the bidding phase ends. Thus, bids can be revealed and executed only after the auction deadline, which prevents bid manipulation, front-running or early information leakage.

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