The open-source protocol Shutter, in collaboration with Gnosis, has introduced a new anti-front running solution utilizing mempool encryption to combat cryptocurrency theft.
According to the announcement, Shutter will be incorporated into the EVM-compatible Layer-1 Gnosis Chain to safeguard user transactions from front running and sandwich attacks.
The protocol aims to protect traders from malicious maximal extractable value (MEV) attacks, which can lead to substantial financial losses and unfair advantages.
This integration marks the beginning of several planned partnerships for Shutter aimed at addressing MEV attacks within the Ethereum ecosystem.
Shutter is scheduled to launch on July 11, coinciding with the final day of the Ethereum Community Conference (EthCC).
The Massive Cost of MEV Attacks
According to the press release, attackers exploit MEV tactics to siphon nearly $900 million annually from crypto trades on Ethereum. During these attacks, perpetrators manipulate blockchain transactions to maximize their own profits while causing financial harm to victims.
One prevalent tactic is the sandwich attack, where attackers strategically place transactions before and after a victim’s transaction to drive up the token’s price, resulting in losses for the victim.
The announcement emphasized that many traders remain unaware of these manipulations until they suffer substantial losses. Even after becoming aware, victims often need to take additional precautions, frequently resorting to centralized systems that may still pose risks of censorship and value extraction.
These attacks not only undermine market efficiency but also erode trust in the blockchain system itself.
‘Deep Integration’
According to the press release, Gnosis Chain’s adoption of Shutter aims to counteract malicious MEV through preemptive measures. This integration is seen as advantageous not only for the Shutter community but also for the broader industry.
Shutter underscores its strategy of embedding its encryption protocol directly into blockchain networks. Described as a “deep integration,” this approach effectively prevents transaction manipulators from exploiting vulnerabilities.
The team asserts that by encrypting transactions before they are committed to the blockchain, block producers are obliged to include and sequence them, thereby making it highly challenging to engage in front running or censorship.
As a result, traders are safeguarded from financial losses “without the necessity for additional safeguards.”
Furthermore, the encrypted mempool also serves to mitigate real-time censorship, ensuring that transactions remain confidential until they are incorporated into a block. This mechanism effectively prevents malicious actors from selectively excluding transactions.
This approach reinforces the fundamental principles of public blockchains—transparency, neutrality, and inclusivity.
According to the team, “By enhancing information symmetry through Shutter’s encryption methodology, we level the playing field.” This enhancement aims to maintain the integrity of public blockchains while fostering increased confidence among retail and large institutional investors who are traditionally discouraged by prevalent front running in decentralized finance (DeFi). Ultimately, this could attract a broader spectrum of participants to the ecosystem over time.
In conclusion, Shutter’s encryption measures not only protect against front running and censorship but also bolster the overall trust and attractiveness of decentralized finance to a wider audience.
