The Meme Token Boom in the Solana Ecosystem and the MEV Issues Behind It

Recently, meme tokens in the Solana ecosystem have become the focus of the market. Some deliberately misspelled celebrity meme tokens have attracted a large number of users, with some tokens even being listed on mainstream trading platforms, with a market cap exceeding 30 billion dollars. On March 15, a token named BOME surged 47 times in price within 24 hours, with a trading volume exceeding 300 million dollars.

However, with the rise of the meme Token craze, some issues have also emerged. Users on decentralized platforms on the Solana chain often suffer from sandwich attacks when purchasing these Tokens, resulting in higher purchase prices and losses. This type of attack falls under the category of MEV (Maximum Extractable Value). So, what exactly is MEV? What impact does it have on the blockchain ecosystem? How does Solana respond to the challenges posed by MEV? Let's explore these questions together.

MEV and Its Applications

MEV stands for Maximal Extractable Value. Initially, MEV referred to the value that miners could extract, primarily existing in the Bitcoin network. Miners gain additional rewards beyond the regular block rewards and network fees by reordering transactions within blocks. With the development of blockchain technology, the concept of MEV has expanded to various public chain networks.

MEV can be seen as a kind of "tax" that blockchain network maintainers charge to ordinary users. Although this may be viewed as a burden, MEV plays an important role in maintaining the development of the blockchain network and the stability of the ecological economy.

Common application strategies of MEV include:

1. Atomic arbitrage: Using price differences between different liquidity pools to perform arbitrage, which helps balance asset prices.

2. Liquidation: In on-chain lending operations, liquidation of unhealthy margin positions is performed to maintain the stable operation of the protocol.

3. Sandwich Attack: Profiting by inserting buy and sell orders before and after user transactions, exploiting the price calculation mechanism of AMM.

In addition, MEV can also be applied to token issuance activities such as IDO, INO, and scenarios like NFT minting.

MEV Situation of Solana

Solana adopts a PoS consensus mechanism, but due to the high requirements for node operation, most validation nodes are located in professional data centers. These nodes can leverage network advantages and parallel design to handle more transactions and earn more block rewards.

In the Solana network, 50% of the transaction fees collected by validators are burned, which is done to incentivize validators to process as many transactions as possible within the allocated time. Recently, the amount of fees burned on the Solana chain has reached a recent high.

The MEV exploitation strategies on Solana mainly include:

1. Garbage transactions: By sending a large number of invalid transactions to occupy network resources, this method can lead to network congestion or even interruption.

2. Priority gas fee: A new mechanism introduced by Solana that allows users to gain transaction priority by paying a higher gas fee, which helps reduce spam transactions.

3. Jito-Solana: Similar to Ethereum's Flashbot, it introduces a mempool and block space auction mechanism that allows users to bid for transaction priority.

Currently, Jito-Solana has become the mainstream validation client for Solana, accounting for 66% of the market share. However, during the recent meme Token craze, sandwich attacks initiated through Jito have caused significant trouble for ordinary users.

Correct Understanding of MEV

MEV is not a phenomenon that can be completely eliminated. Instead, the focus of research should be on how to leverage MEV to benefit ordinary users and applications within the ecosystem. For example, Jito guides Solana validators to choose its client through MEV, increasing the diversity of Solana clients; MEV can also be used to save assets of users and protocols, as well as to redistribute the profits generated by the network.

Overall, MEV is a double-edged sword. While it may bring some inconveniences to ordinary users, it also plays an important role in maintaining network stability, improving efficiency, and promoting innovation. With the continuous development of blockchain technology, it is believed that more solutions will emerge in the future to balance the pros and cons of MEV, bringing more value to the entire ecosystem.