Core Concepts
Introducing the PACCs framework to eliminate MEV in DeFi by shifting it to censorship.
Abstract
This detailed analysis introduces the Private, Anonymous, Collateralizable Commitments (PACCs) framework as a solution to eliminate maximal-extractable value (MEV) in decentralized finance (DeFi). The paper discusses the limitations of existing solutions and proposes an improved variant of single-use collateralized commitments. It outlines how PACCs can be applied effectively to shift MEV opportunities from decentralized exchanges (DEXs), liquidations, and auctions to censorship. The protocol is described with a focus on smart contract wallets and zero-knowledge proofs. The paper also provides insights into related work, cryptographic primitives, commitment mappings, relayers, and the implementation of PACCs using the Ethereum blockchain. Furthermore, it discusses the properties of PACCs and their potential applications in various scenarios such as sealed-bid auctions, decentralized exchanges, request-for-quote protocols, and automated market makers (AMMs).
Index:
Introduction to PACCs Framework
Limitations of Existing Solutions
Improved Variant of Single-Use Collateralized Commitments
Application of PACCs in Eliminating MEV
Protocol Description: Smart Contract Wallets and ZKPs
Related Work Analysis
Cryptographic Primitives Overview
Commitment Mappings and Relayers
Implementation on Ethereum Blockchain
Properties of PACCs and Potential Applications
Stats
Miner-/maximal-extractable value losses on Ethereum are upwards of $500M.
Losses across all blockchains likely amount to billions.
MEV diverts funds from genuine protocol users to extractors.
Existing solutions fail to provide a satisfactory decentralized solution.
Zero-Knowledge Mixers hide transaction information effectively.
PACCs can shift MEV opportunities from DEXs to censorship.
Quotes
"PACCs allow any smart contract wallet holder to collateralize a claim in a private and anonymous manner."
"PACCs can be applied effectively to eliminate maximal-extractable value (MEV) in DeFi."