Anti-MEV Functionality Launched on Neo X EVM Sidechain TestNet

Anti-MEV functionality has launched on the Neo X EVM sidechain TestNet. Activated at block height 2,088,000, this upgrade introduces enveloped transactions and threshold signature support to enhance transaction fairness and network security.

Understanding MEV and Its Impact

MEV strategies – where miners, validators, or bots reorder, insert, or censor transactions to extract profit – are responsible for billions of dollars in user losses annually. These practices disproportionately affect retail users and undermine the integrity of DeFi products built on blockchains. Neo X aims to mitigate these exploits through an approach designed to prevent transaction-level manipulation by its network validators.

Enveloped Transactions: A Three-Step MEV Defense

The Neo X approach centers on “enveloped transactions,” a technique designed to obscure transaction details until after block finalization. The mechanism follows a three-step process:

1. Encryption: Transactions are encrypted, or “enveloped,” before reaching consensus nodes. This prevents validators and MEV searchers from identifying transactions that could yield extractable value.
2. Uniform Processing: Consensus nodes treat all enveloped transactions identically and package them alongside ordinary, unencrypted transactions.
3. Threshold Decryption: After the transaction order is finalized, the network performs threshold decryption. This requires collaboration among two-thirds of the consensus nodes to decrypt transactions and finalize the block.

This three-step process is facilitated by “distributed key generation,” a cryptographic technique implemented by the Neo X development team.

Achieving Single-Block Finality

Previously, Neo X required a one-block delay for block hash finality to address potential reorganization issues. A reorganization, or “reorg,” occurs when a node discovers a longer chain and switches to it, altering the network’s historic record. This delay affected services that relied on immediate finality, including XSig’s multi-signature wallet.

With the integration of threshold block signatures, the network now achieves single-block hash finality. This improvement reduces the potential for reorgs and enhances the sidechain’s usability and security.

Developers interested in experimenting with the MEV-resistant EVM environment can explore available documentation or join the official Neo Discord server for further engagement.

The full announcement can be found at the link below:
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