SBIR Phase I: Next-Generation Maximal Extractable Value (MEV) Proof Distributed Ledger Architecture

The broader impact/commercial potential of this Small Business Innovation Research (SBIR) project is to ensure robust consumer protection for financial applications using distributed ledger technology (DLT). This project aims to improve upon existing global financial infrastructure by replacing it with a safe, open, accessible network powered by the proposed next-generation distributed ledger architecture.

Accessing traditional financial networks is a major challenge, and often requires significant capital coupled with deep industry connections. As DLT stands today, there are still challenges for it to safely support financial applications. DLT vulnerabilities can cost users billions of dollars and is leading to the same monopolistic dynamics that are characteristic of traditional financial infrastructure.

This project aims to advance the foundation of distributed ledger technology to address these issues, and deliver an accessible, safe, democratized financial infrastructure that can operate on a global scale and support the untold myriad of value-added use cases from companies that cannot sustain the high economic costs, or overcome the accessibility barriers, of traditional financial infrastructure.

This SBIR Phase I project seeks to advance distributed ledger technology to safely support financial primitives. Transaction information in modern distributed ledgers is public during origination, allowing validators to exploit this information and at times their privileged position to attack every financial primitive. As an example, there are issues with validators taking arbitrage opportunities and sequencing their own transactions first.

Financial best practices are to silo transactions into distinct lifecycle stages to ensure consumer safety. This solution brings these best practices to DLT through a cryptographic commitment scheme. Cryptographic commitment schemes allow users to commit to an action without disclosing sensitive details, however, the traditional process requires centralization to coordinate the timing for disclosure.

The primary research goal and objective for this Phase I project is proving the viability of a decentralized commitment scheme with real world latency and no centralized timekeeping or coordination mechanism. The proposed architecture will allow users to initiate transactions without including sensitive transaction details at origination. Without sensitive transaction details, validators can no longer exploit this information for their own gain, allowing this architecture to provide the security and privacy necessary for improved safety for financial applications.

This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.