Paradigm proposes 'MEV Tax' for Ethereum Layer2
CryptoNewsTerminal Staff05 Jun, 2024
Paradigm proposes 'MEV Tax' for Ethereum Layer2
Paradigm researchers Dan Robinson and Dave White have proposed a miner extractable value (MEV) tax that could be implemented on Ethereum Layer2 networks. The researchers argue that a MEV tax could incentivize the adoption of fee-priority models, where transactions from users willing to pay the highest gas fees are prioritized, rather than the current Dutch auction model. This, they argue, could increase decentralization and censorship resistance on Layer2 networks. The proposed MEV tax would be paid by block proposers to validators, and would be proportional to the amount of MEV extracted by the block proposer. The researchers argue that this would create a disincentive for block proposers to extract MEV, and would encourage them to instead focus on securing the network. The proposal has been met with mixed reactions from the Ethereum community. Some have argued that a MEV tax could be effective in reducing the amount of MEV extracted by block proposers, while others have raised concerns that it could lead to centralization of the network. The proposal is still in its early stages, and it is unclear whether it will be adopted by any Ethereum Layer2 networks.
