MEV NFT: ERC-721 Fork for Blocking Atomic Arbitrage by Franz | Devcon Bogotá

Transcript

foreign [Music] what started this talk it started in April there was a tweet by bird Miller from flashbots about a moon bird that was actually bought for 44 East and then immediately sold in one single transaction for 240 eth and when I saw this I was like wow this is pretty insane and we are really dived into the topic so at first I'm going to give a short introduction what is Mev um basically who who can say here what

happens if you click like swap on uni Swap and in a one sentence maybe this transaction gets submitted to the mempool uh and the TR the technical view is you have uh the public map Pool where you can submit the transaction and then traditional Finance you only have like a centralized server and then the transactions get uh executed with the public mempool though people can see your transaction and they can insert their own transaction before or even uh I mean the miner itself can insert the transactions manipulate them block them and yeah there's a more technical explanation about like what's different

in POS and the last slide but uh Due Time Yeah so basically Mev exists also in like old auctions it's basically if you skip the auction make a contract with the seller itself in this case the seller is the block space and yeah what is an nft um for me it was kind of interesting to understand that nft is is kind of like the same as an erc20 token but with an ID that was much more understandable to me than like non-fungible token and um they're like if you look at Google search volume you will see that like one to ten thousand people Google how to create a erc20 token each month and like

how people want to create an nft it's like 10 000 to 100 000 people so you could assume that nfts are like very mainstream and um also the the gas if you look at ethereum is kind of high uh from nft projects so like open C is always in the like top 10 of gas vendors you can see the beautiful nft project on the side and um so another question what happens if you like click make a collection bit on a nft side it does work on every Marketplace but maybe uh someone knows it but now so basically if you um click and make a collection bid on an

nft Marketplace usually the auction is off chain but once the the the the like the contract gets held in the mempool people can still like do Arbitrage so let's dive into this rabbit hole so what is an nft Arbitrage basically you buy the nft at One Marketplace and you sell it at the other Marketplace and what what is special about it is in crypto you can do it in a single transaction in one block there's some particular cases about like nfts and Mev or in general like value extraction so uh the the moonberg example is uh pretty uh extreme I find and also the ape coin maybe you've heard of it they had a a

token for every nft holder and there was a a a Trader who basically lent the nfts um claimed the tokens and then sold them immediately so he netted more than like six hundred thousand dollars I think so what what can we do about it because I mean if you look at the the the life cycle of nft it's like pretty mainstream and I don't assume like Bill Murray uh knows like what happens in the mempool and um so there's a couple of resources to educate yourself um this is like website Mev tools which shows like also how to like mint an nft or like submitted transactions through

flashbots uh which is basically making skipping the mempool there's other ways you can avoid it right so if you have an auction where you have a commit reveal you first commit and then once you you place a bit you reveal your bid and you you cannot like front run it because you need to commit first So when you buy an ens domain you have to wait one minute that's basically the reason why so the life cycle of nft you have the minting process um here it can like lead to gas Wars so uh I don't know there was a soccer project that actually had like one million dollars in gas fees and like the the nft mint was like less valuable than like it's crazy right and if you like

submit the transaction to flashpots um it basically if it fails you would you don't need to pay gas so that's important but also um there's been cases where an nft project might be super successful and people were like bribing the miners to make sure that they mended so even if you like a normal consumer you don't have any chance to Mint it right and the holding time of an nft I mean at any case basically if the nfts are flipped and uh yeah the transfer function um is basically for like auctions and um yeah so what can we do and one one idea is we just Fork the erc20 erc71 uh contract and if you think about okay

what is atomic Arbitrage you sell it and buy it in one block so we just simply lock the last transfer and we uh block the the ID from being transferred twice per block um I mean it says it's more like it's a very simple solution um but uh yeah obviously some some contracts might not work with it um so what what are what else can we do what are like conclusions yeah first of all there's different stakeholders so the markets they just want to sell the the artists just want to sell the users I mean they want to don't maybe don't spend so much money uh nft is a bit like long time there's been a case where somebody just wrote a function for uh I think it was a potato or something

and the ver the volume is like pretty uh variable so it might not be uh the the best trading for like a high volume um Trading Company and yeah there's like different resources we've been working on a extension which shows like Mev activity phishing activity and yeah time is over here's the sources thank you so much uh thanks to Alan Bert Miller and so many more maybe I I forgot some and you can find me on Twitter under uh filmfronts thank you so much