Rebar Labs Aims to Launch Bitcoin's Flashbots Equivalent to Shield Traders From MEV Strategies

Rebar Labs aims to launch the first Bitcoin-native platform for shielding traders from maximum extractable value (MEV) strategies, such as frontrunning, by the end of 2024

Bitcoin ( BTC ) traders could soon have a new tool to protect themselves from harmful maximum extractable value (MEV) strategies, such as front-running.

Rebar Labs, a company building Bitcoin-native decentralized finance (DeFi) infrastructure, is aiming to launch the first Bitcoin-native platform for shielding traders from MEV strategies by the end of 2024, CEO Alex Luce told Cointelegraph in an interview.

Bitcoin’s emerging ecosystem of native decentralized exchanges (DEXs) and layer-2 (L2) scaling solutions has reinvigorated the oldest blockchain network but has also created new risks for traders, including harmful MEV.

“Right now, if we’re talking about MEV, the most obvious example on Bitcoin is front-running,” said Luce. “It’s happening fairly often.”

MEV refers to the maximum profit that can be extracted from knowing the future state of the blockchain, typically used to describe strategies employed by miners to maximize their earnings. However, third parties can also use MEV to insert transactions into a block before others, enabling them to, for example, trade ahead of a large order and capture the profits.

On Ethereum, where MEV strategies are more advanced, a group of builders called Flashbots has emerged to protect DEX traders from harmful MEV strategies, such as frontrunning and sandwich attacks, by bundling and sending out traders’ transactions anonymously.

In turn, miners are incentivized to include these bundles, known as blocks, in the next chain by offering a portion of the MEV profits to the miners.

According to Dune Analytics, Flashbots has protected around $43 billion of decentralized exchange trades from MEV since 2021. Rebar Labs’ Shield is set to become Bitcoin’s equivalent.

“We’re aiming to launch Shield with a sizable amount of the Bitcoin network’s hashrate,” said Luce. “We’re speaking with all the large miners in the space right now.”

According to Luce, good MEV on Bitcoin can help even out prices and aid traders in executing their trades quickly in a market where DEXs are largely interoperable and liquidity is fragmented.

“On Bitcoin, these DEXs aren’t very interoperable, and liquidity is fragmented,” Luce said. “That’s where good MEV comes in — someone can come in, even out the prices, and help users with execution.”

Moreover, Rebar’s Shield aims to enhance returns for Bitcoin BTC $68,468 miners, who process transactions and post them to Bitcoin’s blockchain ledger.

Bitcoin began its journey as a simple peer-to-peer payment protocol, but its 2021 Taproot upgrade enabled the network to support more complex activities, such as creating and trading other types of tokens and minting non-fungible tokens (NFTs).

However, Bitcoin-native DeFi is still nascent and is largely limited to crypto-native traders, as to use a Bitcoin DEX, traders must first interact on-chain to fund their trading accounts.

“Today, daily volume is in the millions, maximum. It’s not significant,” said Luce. “What we really view this space as right now is sort of a very early beta where you don’t have that many users interacting with it.”

“In the next 12 months, if you can’t get good execution on Bitcoin, chances are you’re going to move to an L2,” Luce added. “I think it’s a missed opportunity if that happens because Bitcoin is such a great market.”

According to DefiLlama, the total value locked on Bitcoin’s L2s stands at approximately $2 billion as of Oct. 18. Some of the Bitcoin L2s include Babylon, Core Chain, Rootstock, and Stacks, among others.