The chain re-org issue.

So today Edgar on twitter released a github repo , it is basically a software that will let the miners reorganize(re-org) the chain to extract MEV(Miner Extractable Value). There are people claiming that Ethereum blockchain is broken and so on. Let’s dig deep into this.

To understand chain re-org we will have to understand what uncle blocks are and how they are produced. Uncle blocks are stale blocks which are produced when 2 blocks are mined at the same time and as the propagation speed varies some nodes receive the one block first and the remaining receive the other one. This basically creates a ephemeral fork in the chain which is resolved when more blocks are added. The longest chain becomes the main chain and the blocks of temporary forked chain are dropped.These dropped blocks are uncle blocks. Miner who mined the uncle block receives a reward for using the computation power to mine the block . So adopting the longest chain is what chain reorganization means.Uncle blocks are created all the time with varying depths .

If someone wants to do a malicious transaction they need a hashing power of 51% of the whole network which basically is a 51 percent attack . The more decentralized the chain is the less is the possibility of such attacks happening.

The software released today by Edgar provides incentive to the miner to re-org the chain and there by extract the MEV. Example : suppose a hacker is able to rug a poorly coded protocol and drains $20m worth of usdc . So miners with the use of software can re-org the chain and uncle the block that has the transactions by the hacker with their own block to receive the hacked funds.Now miners have much more of an incentive to launch a 51 % attack than they had before.The moment a transaction is reversed the chain is broke.Still there are a lots of factors that are not known and the developer community will surely mitigate this.

Also the proof of stake consensus will dis incentivize this , and the months before the merge happens will be really crucial for this.

Long term this is good for Ethereum and helps the chain become more resilient.

For in depth understanding review these articles

https://insights.deribit.com/market-research/the-onion-model-of-blockchain-security-part-1/

https://blog.chain.link/what-is-miner-extractable-value-mev/

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A Crypto, DeFi and tokenomics enthusiast

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Senpai

Senpai

A Crypto, DeFi and tokenomics enthusiast

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