#Over 100 Companies Hold Over 830,000 BTC#
According to reports as of June 19, more than 100 companies collectively hold over 830,000 BTC, worth about $86.476 billion.
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Experts discussed the threat of MEV to the scalability of networks.
The maximum extractable value (MEV) has become "the dominant constraint for scaling blockchains". This was stated in a report by the research group Flashbots.
Experts have found that spam transactions generated by arbitrage bots consume block space faster than even high-performance networks can expand it.
Researchers provided some data:
According to the Flashbots team, projects get caught up in the technical side of scaling networks but overlook the economic constraints imposed by market structure.
MEV bot operators take advantage of low transaction costs, of which the software sends a huge number. In the given example of a successful arbitrage trade, the bot earned $0.12 after paying $0.02 in fees.
But the true cost of the operation is shocking, experts noted. For one successful transaction, the bot, on average, sends about 350 million transactions and consumes approximately 132 million gas — equivalent to almost four full Ethereum blocks.
The economy of such activities ensures that one successful operation more than covers the costs of failures in others. Essentially, bots are used as search engines with built-in logic for executing a specific algorithm. They initiate a transaction to include it in a block and send out a mass of requests to decentralized exchanges in search of arbitrage opportunities. This costs around ~2.6 million gas. If no options are found, the bot simply does nothing.
At the same time, one of the catalysts for spam is the transition of networks to private mempools. The solution was conceived as a way to protect users from front-running. However, the main way to make a profit for MEV bots in rollups is arbitrage. And in order to gain access to closed information in the pools, the software is forced to send transactions to each block, experts noted.
In addition to low fees, they also mentioned the lack of an effective auction mechanism for transactions as one of the factors — the order of their inclusion in a block is roughly determined by gas consumption.
The activity of bots leads to blockchain congestion, increasing the equipment requirements and the rise in fees for ordinary users, they added.
Flashbots experts see the solution to the problem in the implementation of "programmable privacy". This implies user access to transactions in real-time with simultaneous software restrictions on the possibility of information abuse.
As a reminder, Ethereum co-founder Vitalik Buterin called MEV one of the main threats to the centralization of the network alongside liquid staking and the cost of running a full node.