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BriDe Arbitrager: Enhancing Arbitrage in Ethereum 2.0 via Bribery-enabled Delayed Block Production

Hulin Yang, Mingzhe Li, Jin Zhang, Alia Asheralieva, Qingsong Wei, Siow Mong Rick Goh

TL;DR

The paper tackles arbitrage-driven MEV under Ethereum 2.0 by introducing BriDe Arbitrager, a bribery-enabled framework that delays block production to widen observation windows and amplify profits. It develops an adaptive bribery strategy, a Delayed Transaction Ordering Algorithm (DTOA) to maximize arbitrage via controlled transaction ordering, and a fair, automated bribery system through a smart contract and client. The approach is experimentally evaluated on a local Eth2-like network and historical Ethereum data, showing substantial profit potential (e.g., 8.66 ETH daily in broader experiments and 137.83 ETH across strategy sets) and resilience under PBS and SSLE. The work also discusses countermeasures and broader implications for MEV security, highlighting the need for protocol-level changes to mitigate bribery-enabled delays while outlining avenues for extending the framework to other MEV techniques.

Abstract

The advent of Ethereum 2.0 has introduced significant changes, particularly the shift to Proof-of-Stake consensus. This change presents new opportunities and challenges for arbitrage. Amidst these changes, we introduce BriDe Arbitrager, a novel tool designed for Ethereum 2.0 that leverages Bribery-driven attacks to Delay block production and increase arbitrage gains. The main idea is to allow malicious proposers to delay block production by bribing validators/proposers, thereby gaining more time to identify arbitrage opportunities. Through analysing the bribery process, we design an adaptive bribery strategy. Additionally, we propose a Delayed Transaction Ordering Algorithm to leverage the delayed time to amplify arbitrage profits for malicious proposers. To ensure fairness and automate the bribery process, we design and implement a bribery smart contract and a bribery client. As a result, BriDe Arbitrager enables adversaries controlling a limited (< 1/4) fraction of the voting powers to delay block production via bribery and arbitrage more profit. Extensive experimental results based on Ethereum historical transactions demonstrate that BriDe Arbitrager yields an average of 8.66 ETH (16,442.23 USD) daily profits. Furthermore, our approach does not trigger any slashing mechanisms and remains effective even under Proposer Builder Separation and other potential mechanisms will be adopted by Ethereum.

BriDe Arbitrager: Enhancing Arbitrage in Ethereum 2.0 via Bribery-enabled Delayed Block Production

TL;DR

The paper tackles arbitrage-driven MEV under Ethereum 2.0 by introducing BriDe Arbitrager, a bribery-enabled framework that delays block production to widen observation windows and amplify profits. It develops an adaptive bribery strategy, a Delayed Transaction Ordering Algorithm (DTOA) to maximize arbitrage via controlled transaction ordering, and a fair, automated bribery system through a smart contract and client. The approach is experimentally evaluated on a local Eth2-like network and historical Ethereum data, showing substantial profit potential (e.g., 8.66 ETH daily in broader experiments and 137.83 ETH across strategy sets) and resilience under PBS and SSLE. The work also discusses countermeasures and broader implications for MEV security, highlighting the need for protocol-level changes to mitigate bribery-enabled delays while outlining avenues for extending the framework to other MEV techniques.

Abstract

The advent of Ethereum 2.0 has introduced significant changes, particularly the shift to Proof-of-Stake consensus. This change presents new opportunities and challenges for arbitrage. Amidst these changes, we introduce BriDe Arbitrager, a novel tool designed for Ethereum 2.0 that leverages Bribery-driven attacks to Delay block production and increase arbitrage gains. The main idea is to allow malicious proposers to delay block production by bribing validators/proposers, thereby gaining more time to identify arbitrage opportunities. Through analysing the bribery process, we design an adaptive bribery strategy. Additionally, we propose a Delayed Transaction Ordering Algorithm to leverage the delayed time to amplify arbitrage profits for malicious proposers. To ensure fairness and automate the bribery process, we design and implement a bribery smart contract and a bribery client. As a result, BriDe Arbitrager enables adversaries controlling a limited (< 1/4) fraction of the voting powers to delay block production via bribery and arbitrage more profit. Extensive experimental results based on Ethereum historical transactions demonstrate that BriDe Arbitrager yields an average of 8.66 ETH (16,442.23 USD) daily profits. Furthermore, our approach does not trigger any slashing mechanisms and remains effective even under Proposer Builder Separation and other potential mechanisms will be adopted by Ethereum.
Paper Structure (37 sections, 3 theorems, 22 equations, 12 figures, 1 table, 1 algorithm)

This paper contains 37 sections, 3 theorems, 22 equations, 12 figures, 1 table, 1 algorithm.

Table of Contents

  1. Introduction
  2. Background, Related Works and Motivation
  3. Decentralized Finance
  4. MEV and Arbitrage
  5. Ethereum 2.0
  6. New Arbitrage Enhancing Chances
  7. Bribery Attack
  8. Modeling
  9. System Model
  10. Threat Model
  11. Bribery Attack Formalization
  12. Theoretical Analysis
  13. Bribery Fee of Bribing Validators
  14. Bribery Fee of Bribing Proposers
  15. Bribery Strategy Selection
  16. ...and 22 more sections

Key Result

Theorem 1

For the malicious proposer $\mathrm{P}_{t}$, successfully delaying block production, i.e., the bribery chain $\mathbb{C}_{b}$ collects a larger voting weight than that collected by the main chain $\mathbb{C}_{m}$, requires that the proportions of bribed rational validators $\beta$ satisfies:

Figures (12)

  • Figure 1: Motivating example.
  • Figure 2: Proposer $\mathrm{P}_{t}$ bribes validators.
  • Figure 3: Proposer $\mathrm{P}_{t}$ bribes a proposer.
  • Figure 4: Profits of different arbitrage algorithms.
  • Figure 5: Profit as a function of the initial capital with and without flash loans.
  • ...and 7 more figures

Theorems & Definitions (6)

  • Theorem 1
  • proof
  • Theorem 2
  • proof
  • Theorem 3
  • proof