Neo has launched its new sidechain, Neo X, in order to address the issue of miners and validators manipulating block data, which hinders the widespread adoption of blockchain-based products. The sidechain aims to tackle MEV attacks and provide a secure platform that promotes trust and drives innovation in the blockchain industry.
MEV, short for miner or maximal extractable value, is a crucial concept in the blockchain space. It refers to the methods used by miners and validators to increase their earnings through transaction manipulation. This manipulation can lead to MEV attacks, where miners take advantage of their positions to prioritize their transactions or delay the publication of completed blocks.
MEV attacks have been involved in several high-profile incidents across different blockchain platforms. One example is the Curve finance hack, where an MEV bot executed a heist of $61 million. Another example is a Solana MEV bot that extracted $1.7 million using the Dogwifhat token. Additionally, a loss of $25 million occurred due to an exploit targeting sandwich trading bots.
These MEV attacks pose a threat to the decentralized and transparent nature of blockchain, creating fairness and security issues in the DeFi space. Neo, an open-source and community-driven blockchain platform, has taken a proactive approach by introducing its EVM-compatible sidechain, Neo X, to address the challenge of MEV attacks and provide a secure platform that fosters trust in the blockchain industry.
The Neo X chain achieves MEV resistance through two innovative features. First, the dBFT consensus mechanism, pioneered by Neo, eliminates toxic MEV from the protocol level, preventing miners or validators from compromising the block generation process. This ensures that all consensus nodes act in a rational manner and prevents transaction rearrangement. Secondly, Neo X utilizes a combination of Distributed Key Generation (DKG) and threshold encryption/decryption to encrypt and decrypt transaction information. This prevents transaction processors from accessing the details of transactions, forcing them to process transactions neutrally. This combined method is called enveloped transactions and adds security to the network infrastructure.
Da Hongfei, the founder of Neo, emphasized the financial implications of toxic MEV and highlighted the importance of integrating enveloped transactions with Neo’s dBFT consensus mechanism to protect users and ensure the successful growth and adoption of blockchain.
In addition to improving security, Neo aims to develop the most compatible and developer-friendly blockchain infrastructure through its N3 protocol. By introducing an MEV-resistant sidechain like Neo X, Neo aims to address security issues and encourage developers and users to explore and contribute to the field of blockchain technology. This advancement will pave the way for a richer, more diverse, and innovative blockchain landscape.
Disclaimer: This article is sponsored content and does not constitute investment advice. Readers should conduct their own research and make decisions at their own risk.