Flashbots Dominate Ethereum’s Transaction System, Reducing Gas Fees
A recent social media user took to Twitter on April 11, 2021, mentioning that Ethereum gas fees have reduced significantly due to the emergence of Flashbots. According to Stephane, the user in question, a mining pool, commented on the issue, saying that traders are ditching their PGA bots as Flashbots bring lower gas fees.
Meanwhile, another Reddit user commented on the same, explaining that the gas fees decreased by 50% in the last 24 hours, moving from 120 gwei to 65 gwei. Priority Gas Option (PGA) is currently facing a competitive advancement whereby 58% of the hashrate is generated by Flashbots alone.
Flashbots operates as a research and development entity aiming at solving the existential risks affecting a blockchain network like Ethereum. Normally, bots compete to have a similar tx added on a blockchain as the first one, ultimately creating a bidding war that increases the ecosystem’s gas fees.
Therefore, Flashbots builds special tools that manage arbitrage bots’ activities and reduce gas costs on a chain. The organization strives to enable an honest, permissionless, and successful miner extractable value (MEV). As per an explanation from a Twitter user named Silto, he states that,
“If multiple bots detect an arbitrage between pools, they will craft the same tx, send it to the mempool, but then detect that other bots are on it too and start raising the gas price on their tx to be included first, like in an auction.”
While it may be advantageous for miners who earn tremendous amounts of profits through the MEV system, users remain adversely affected as only overcharged tx are included, bringing a surge in transaction costs.
The issue is visible on the MEV dashboard displaying a total of $369.40 Million extracted MEV from January 1, 2020. On top of that, the value of MEV obtained over the last one month totals $43.4 million.
Flashbots are on the front line to ensure each miner is linked to their preferable bots to add their tx easily and successfully. Adopting Flashbots could be a trigger that led to a surge in Ethereum’s price towards the $2200 level.
To be precise, the second largest coin is trading at $2,167, as more users continue to leverage a cheaper transaction cost.
The Underlying Projects
As mentioned earlier, Flashbots hopes to reallocate MEV profits fairly and put across the value of MEV revenue to chain participants. The organization will achieve this with its two projects; MEV-explore and Flashbots Alpha. The MEV-explore project specifically deals with describing how much MEV is available in Ethereum’s chain.
It is also capable of estimating the total MEV amount that bot operators and DeFi traders accumulate. Flashbots Alpha, on the other hand, is on toes to set up a communication medium between miners and traders on a proof of concept system.