The venture capital cash keeps pouring into innovative crypto and decentralized finance projects, with the latest recipient being the Eden Network.
Eden is a priority transaction network for Ethereum that offers protection against miner extractable value (MEV) and front-running. Multicoin Capital led a $17.4 million funding round with participation from Jump Capital, Alameda Research, Wintermute, GSR, Defiance Capital, and Yearn Finance founder, Andre Cronje.
The funds were raised through a sale of EDEN tokens and the team will use the capital to improve infrastructure, increase adoption, and expand its existing ten-person team.
MEV Protection in Action
The Eden Network went live with Ethereum’s London hard fork on Aug. 5 in a bid to help users prioritize their transactions while protecting them against MEV.
Multicoin Capital explained the issue of miner extractable value in a Sept. 8 blog post announcing the funding round. Ethereum miners have the power to select and prioritize which transactions are included in a block, which gives them opportunities for profits. According to the venture company, MEV on Ethereum is estimated to be more than $700 million since the beginning of 2021.
There are different types of miner front-running, but the most basic one is arbitrage between decentralized exchanges, it explains.
“If the price of an asset is different between Uniswap and SushiSwap, there is a guaranteed profit to be made by the first trader who can execute the arbitrage.”
It added that the block producer chooses which transaction is going to be first in that block and can decide who will earn this arbitrage profit. There are other forms of more malicious MEV such as front-running and “sandwich attacks” which manipulate the blockchain purely for profit.
This makes the whole system “less secure, less stable, and less efficient, and is purely value extractive,” stated Multicoin Capital.
EDEN tokens prioritized
Eden works by prioritizing blocks where EDEN tokens have been staked, protecting from MEV, and providing better price execution. It claims to already represent 54.7% of Ethereum’s hash rate.
The network provides revenue for Eden block producers in the form of its tokens, while mitigating bad behavior. It rents prioritized block space in Eden blocks to “Slot Tenants” via “Slot Auctions” for projects wishing to get protection from MEV.
The Eden Network is formerly known as Archer DAO which raised $1 million last year selling ARCH tokens. Its EDEN token has surged 47% on the day to trade at $9 at the time of writing according to CoinGecko.
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