Popular Crypto Wallet MetaMask Rolls Out ‘Smart Transactions’ to Combat Ethereum Front-Running

Smart Transactions, a new feature that can be enabled, functions as a preliminary queue for users to submit their transactions. Before being confirmed on the blockchain, these transactions are held in this “virtual mempool.” According to Consensys, the developer of MetaMask, this mempool offers safeguards against specific MEV (Minimum Evasive) strategies and conducts covert simulations to help users secure reduced transaction fees.

Blockchain operators can generate additional profits, known as Minimum Value Extraction (MEV), by reviewing or rearranging transactions before they are processed on the Ethereum network. This practice is similar to the controversial act of front-running in traditional financial markets, where traders exploit advance knowledge of others’ orders to make profitable trades. MEV significantly influences Ethereum’s functioning – it can lead to increased transaction fees for users, slower processing times, and even transaction failures under specific network circumstances.

As a crypto investor, I’ve come to realize that approximately $400 million is being squandered annually due to transactions needing to be reverted, getting stuck, and falling prey to blatant MEV front-running and sandwich attacks.

According to Linehan, it’s widely acknowledged that this is a significant issue. And from a standpoint of user experience, the concept of paying for a transaction with no result seems illogical or even absurd.

MetaMask’s approach, which involves using a virtual mempool similar to a private mempool, is gaining traction as a method for enhancing transaction privacy and safeguarding against Miner Extractable Value (MEV). This marks an initial move in MetaMask’s broader plan, as reported by CoinDesk earlier this year, to significantly alter the way it processes transactions on Ethereum behind the scenes.

The use of private mempool services in Ethereum can create centralization issues due to the involvement of intermediaries in processing transactions before they get added to the Ethereum network. Consensys maintains that its virtual mempool operates differently and is crucial for managing Ethereum’s concealed expenses.

“Linehan stated, ‘We have no intention of seizing control of Ethereum or similar platforms.’ However, he questioned the sustainability of Ethereum as the foundation for the global economy if it continues to squander $400 million annually on features that provide no value to its users. This expenditure is purely wasteful.”

How ‘Smart Transactions’ works

When a user instructs their blockchain wallet to process a transaction on a network like Ethereum, they’re essentially placing that transaction in a public queue – known as a mempool – overseen by a decentralized system of bots and traders. This queue functions as a holding pen for unconfirmed transactions. Collaborative efforts from “block builders” and “searchers” ensure that these transactions are grouped into cohesive bundles, referred to as blocks. Once completed, these blocks are then added to the digital ledger of the blockchain.

As a blockchain analyst, I’ve observed that builders and miners actively explore the mempool in search of lucrative trading opportunities. At times, they manipulate transactions by reordering them or inserting their own trades into blocks to maximize profits, a practice known as “maximal extractable value.” While this strategy can benefit the profit-driven actors, it may come at a cost for everyday blockchain users. The result could be increased transaction fees, failed transactions, and slower overall network performance.

As a researcher studying Metamask’s functionality, I can explain that Metamask employs builders and searchers in a similar fashion as Ethereum does for its transaction processing. However, within Metamask’s system, these entities operate in what is known as a virtual mempool. In contrast to the public mempool on Ethereum, where there are no financial repercussions for unsuccessful transactions, the builders and searchers in the Metamask virtual mempool face financial penalties if they fail to execute transactions at the quoted prices provided by MetaMask to its users.

Approximately 95% of Ethereum builders and searchers have chosen to participate in its virtual mempool program as it starts being implemented in phases throughout this week. An earlier adaptation of this technology, referred to as “Smart Swaps,” has been accessible for several months.

As a crypto investor, I’ve come to appreciate the distinctiveness of MetaMask’s virtual mempool network. Its expansive size sets it apart from traditional private mempools. Moreover, its transparency in operations and innovative incentive scheme are unique features that make a difference.

Along with securing favorable prices for users, Linehan explains that the Smart Transactions feature in MetaMask will enable users to monitor their transaction statuses more conveniently. Normally, this task would necessitate visiting external websites such as Etherscan.

As a researcher studying MetaMask, I would describe Smart Transactions as the initial concrete implementation paving the way for our ambitious vision. This innovation sets the foundation upon which we can eventually construct intriguing applications, such as intent-based architectures, that have generated much excitement in the blockchain community.