MEV bots, automated tools in crypto, execute profitable opportunities on networks like Ethereum. They contribute to market efficiency but also pose challenges and risks, including potential hacking. (Read More)

Crypto traders are using artificial intelligence (AI) to help them turn a profit. Projects are rapidly building AI tools that can execute trades with a particular focus on permissionless, ostensibly decentralized exchanges (DEX). Some of these tools are black boxes that use enterprise AI services, such as GPT-4 or Bard. Others use a combination of AI plus discretionary parameters. Once set up…

The 689 Ether, worth nearly $1.3 million, is the largest reward received since the 691 Ether reward on March 20 paid to Lido.

Flashbots Wants to Raise $50 Million, Investors Must Pitch

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Flashbots is seeking to raise $50 million with a $1 billion pre-money valuation, according to The Block, citing sources aware of the deal.

Pitch To Flashbots For A Chance to Invest

As they look to crowdfund, it has been revealed that Flashbots is doing a “reverse pitching” where interested investors have to pitch, not the other way around. In this arrangement, investors confident of Flashbots’ prospects must explain, in detail, why they should have a slot in this investment round.

Eventually, the goal is to raise between $30 million and $50 million in “equity investment,” pushing the firm’s valuation to unicorn status. Flashbot plans to split this investment round into two.

Although Paradigm didn’t respond publicly to the publication’s request for comment or comment on the inquiry, details reveal that the crypto fund was among the first to show interest. They participated in Flashbots’ seed sale in 2020. However, Flashbots didn’t indicate the amount raised in the seed sale. 

Flashbots is a research and development organization claiming to negate the effects of maximum extraction value (MEV) in account-based blockchains like Ethereum and the BNB Smart Chain (BSC).

Ethereum Price Chart | Source: ETHUSD on Trading View

Specifically, Flashbots focuses on Ethereum, where the costs of MEV can be high considering the high on-chain activity and the impact of gas fees, which is also relatively high versus other more scalable networks, including BSC. Their involvement, Flashbots’s documents explain, avoids the “existential risks MEV could cause to state-rich blockchains like Ethereum.”

Tackling MEV

MEV in blockchains is the maximum value that can be extracted from block production after validators, tasked with confirming transactions and securing the network, include or even re-order transactions in a block.

Unlike Bitcoin, where transaction order is given, in Ethereum and similar networks, ordering is haphazard. It means profit-seeking validators can prioritize transactions tagged with higher fees.

This explains why whenever the MEV in a block is higher than the network block reward, a validator can decide to re-order transactions in a block, creating vectors for possible centralization and exploitation.

Related Reading: ViaBTC Capital | Reasons Behind Solana’s Frequent Downtime: Design Flaws in the Gas Economy

Flashbots curbs this problem using MEV Boost. It is software allowing builders to auction blocks to validators, averting MEV centralization. Each party earns a fee for their contribution.

Flashbots’s recent open source tool, Single Unifying Auctions for Value Expression (SUAVE), further decentralizes and avails, to everyone, including competitors, the MEV Boost.

The reason for open-sourcing SUAVE is novel and meant to help the entire ecosystem grow stronger by proper decentralization.

In Devcon Bogota, Philip Daian of Flashbots said:

“So, we’re going to use MEV as this decentralized engine in the long term to make sure the users get the best execution on their trades in a way that will make TradFi look embarrassing very shortly.”

Feature Image by The Block, Chart from Trading View

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Flashbots Seeks to Raise $50M at $1B Valuation: Report

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Key Takeaways

Flashbots is seeking to raise between $30 million and $50 million.

The MEV company is being valued at $1 billion.

Flashbots has recently come under fire for its role in censoring Tornado Cash transactions on Ethereum.

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Lead MEV organization Flashbots is conducting a reverse-pitching process to raise between $30 million and $50 million. The company has recently come under fire for its role in censoring Ethereum transactions.

$1 Billion Valuation

Flashbots is changing its business model.

According to a report from The Block, crypto’s leading MEV organization is looking to raise between $30 million and $50 million at a $1 billion valuation. 

Interestingly, Flashbots is reportedly conducting a reverse-pitching process: instead of pitching prospective investors, the organization is inviting investors to make their own pitches—meaning that they need to convince the company to accept their funds. Crypto investment fund Paradigm is reportedly leading the investment round; the firm was Flashbots’ lead investor in its seed-stage fundraise in 2020.

MEV stands for “Maximal Extractable Value.” The term refers to arbitraging on-chain trading opportunities by reordering transactions within a block while it is being produced. Flashbots provides an off-chain block-building marketplace for on-chain traders and validators, with the stated aim of streamlining MEV and mitigating its negative impacts on users. According to Flashbots data, MEV has extracted more than $687 million from blockchain users since January 2020. 

Flashbots, which has marketed itself as an Ethereum public good in the past, has recently come under controversy over its willingness to censor Tornado Cash-related transactions on Ethereum in order to comply with OFAC sanctions. According to MEV Watch, at the time of writing 66% of Ethereum blocks are being produced by MEV-Boost relays that have expressed their intention of censoring such transactions; Flashbots is responsible for producing over 65% of these censorious blocks. In a sense, the organization’s fundraising efforts mean that investors may be financially rewarded for censoring Ethereum transactions.

Disclaimer: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.

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