It seems like this week everyone decided to start talking about MEV on the Mother Chain. While this discussion is fairly mature on other blockchains like Ethereum, it’s been barely made an impression on Bitcoin over the past 15 years. Now it’s here.
Why is this all of a sudden happening? When a blockchain is more “expressive” (e.g. Ethereum’s smart contracts) or has multiple different assets on-chain, there are more incentives at play than simple monetary transaction settlement. This is why Ethereum has had MEV occurring for years. Now with Ordinals on Bitcoin (and fungible tokens like BRC-20s) there are multiple types of assets being traded. A regular Bitcoin transaction for 10,000 satoshis might contain a Quantum Cat worth 1.9 BTC!
So how are “power users” doing MEV? The most common form of MEV on Bitcoin right now is by “sniping” Ordinals sales from marketplaces like MagicEden. Snipers watch the public mempool for Partially Signed Bitcoin Transactions (PSBTs) that contain valuable Ordinals, replace the payment and destination of the transaction, and use “Replace-by-fee” (RBF) to get that transaction mined into a block before the original sale transaction.
What does it mean for MEV to be on Bitcoin? Well, this is about where we are in the discussion. Generally, most people agree that MEV can harm the incentives that keep a blockchain decentralized. Therefore most conversations have been about how to mitigate or capture it.
Miners like Marathon have released tools like Slipstream which allow users to submit transactions directly to their mining pool, this allows them to capture some revenue on the side (MEV) from transactions which wouldn’t typically get into blocks.
TL;DR: Bitcoin is going to get a lot more interesting for power users, miners, and mining pools. The days of Bitcoin being the “boring” chain are over
