Neo, the open-source blockchain platform, has launched its new sidechain, Neo X, to tackle the issue of miners and validators manipulating block data. This manipulation, known as maximal extractable value (MEV) attacks, can undermine the trust and fairness of blockchain-based products. Neo X aims to provide a secure platform that fosters trust and drives innovation in the blockchain industry.
MEV attacks occur when miners or validators exploit their positions to manipulate transactions and enhance their earnings. This can involve placing their transactions ahead of others or delaying the publication of completed blocks. These attacks have resulted in significant financial losses, such as the $61 million heist in the Curve finance hack and the $1.7 million extraction by a Solana MEV bot.
To address the challenge of MEV attacks, Neo X introduces two innovative features. First, it utilizes the dBFT consensus mechanism, pioneered by Neo, to prevent miners or validators from compromising the block generation process. This mechanism eliminates toxic MEV from the protocol level and ensures that consensus nodes cannot withhold the block-producing process or rearrange transactions.
Secondly, Neo X uses a combination of Distributed Key Generation (DKG) and threshold encryption/decryption to encrypt and decrypt transaction information. This prevents transaction processors from seeing inside transactions and forces miners and validators to process all transactions neutrally. This method, known as enveloped transactions, adds an extra layer of security to the network infrastructure.
Neo founder Da Hongfei emphasized the financial implications of MEV attacks and highlighted the importance of integrating enveloped transactions with the dBFT consensus mechanism to safeguard users. By addressing these security issues, Neo aims to develop the most compatible and developer-friendly blockchain infrastructure through its N3 protocol.
The introduction of an MEV-resistant sidechain like Neo X is a significant advancement in enhancing security and fairness in the blockchain industry. It provides reassurance to developers and users, encouraging further exploration and contribution to the field of blockchain technology. This, in turn, paves the way for a richer, more diverse, and innovative blockchain landscape.