FHE Could Render MEV Extinct in DeFi

Decentralized finance (DeFi) platforms are plagued by Maximal Extractable Value (MEV), a 'primitive ecosystem' where predatory bots exploit user transactions for profit. MEV arises from public mempools, which allow bots to calculate slippage limits and front-run trades with higher gas bribes.

This design flaw enables automated searcher bots to scan the queue for profitable decentralized exchange (DEX) swaps and submit predatory trades first. In essence, it's a 'slaughterhouse' where liquidity is drained from the system.

Fully Homomorphic Encryption (FHE), however, can permanently dismantle this cartel by encrypting transactions mathematically, eliminating MEV. FHE allows computers to perform computations directly on encrypted data, producing an encrypted result that matches the outcome of operations as if they were performed on raw plaintext.