What happened?
SKALE Labs has launched BITE Protocol, a new consensus-level solution designed to eliminate Maximal Extractable Value (MEV) in blockchain transactions. BITE stands for ‘Blockchain Integrated Threshold Encryption’ and works by encrypting transactions before they enter the mempool and decrypting them after the block is finalized. This new protocol aims to prevent malicious actors from accessing or manipulating transaction data before a block is confirmed.
Who does this affect?
The introduction of BITE Protocol impacts a wide range of blockchain participants, including decentralized exchanges, NFT marketplaces, lending protocols, on-chain games, prediction markets, and real-world asset tokenization platforms. It provides a level playing field by ensuring privacy and fairness in transactions, making it particularly beneficial for those bringing traditional financial assets onto blockchain networks. Additionally, end-users will experience increased protection against front-running and other exploitative behaviors prevalent in existing blockchain systems.
Why does this matter?
The launch of the BITE Protocol could have significant market impact by reducing the $1.8 billion problem of MEV extraction, which has plagued the blockchain industry since 2020. This development is poised to enhance the credibility and attractiveness of blockchain networks to traditional financial institutions by aligning blockchain transactions more closely with traditional finance standards. Furthermore, SKALE Labs claims this innovation may lead to current Layer-1 blockchain technologies becoming obsolete, marking a significant evolution in blockchain infrastructure and potentially influencing SKALE’s market position positively.