MEV Protection Policy

1. Purpose

Maximal Extractable Value (MEV) refers to the profit that can be extracted from blockchain users by reordering, inserting, or censoring transactions within a block. MEV exploitation — including front-running, sandwich attacks, and back-running — can cause significant financial harm to users by degrading trade execution quality.

This policy describes the technical and procedural safeguards Slopshop Inc. ("Mithril") implements to protect users from MEV exploitation when executing trades through the platform.

2. Threat Model

Mithril protects against the following MEV attack vectors:

• Front-Running — An attacker observes a pending user transaction in the mempool and submits an identical or related transaction with a higher gas price to execute before the user, profiting from the resulting price movement.
• Sandwich Attacks — An attacker places a buy order before and a sell order after a user's pending swap, profiting from the price impact caused by the user's transaction.
• Back-Running — An attacker places a transaction immediately after a large user trade to capture arbitrage created by the price impact.
• Time-Bandit Attacks — Validators reorder historical transactions across multiple blocks to extract value retroactively.

3. Slippage Controls

All user-facing trade interfaces enforce configurable slippage tolerance to limit the price impact a user is willing to accept:

• Default Slippage — The platform sets a default slippage tolerance of 0.5% for tokenized equity trades and 1.0% for LP interest trades. Users may adjust this within a range of 0.1% to 5.0%.
• Slippage Warning — When a user sets slippage above 2.0%, an explicit warning is displayed indicating increased risk of unfavorable execution.
• Transaction Reversion — On-chain transactions that would execute beyond the user's specified slippage tolerance are automatically reverted by the smart contract, preventing unexpected losses.

4. Private Transaction Submission

Mithril integrates with private transaction relay services to prevent mempool exposure of user transactions:

• Flashbots Protect (Ethereum) — When users execute trades on Ethereum mainnet, transactions are routed through Flashbots Protect, which submits transactions directly to block builders without exposing them to the public mempool.
• Base Sequencer (Base L2) — On Base, transactions benefit from the sequencer's first-come-first-served ordering, which provides natural protection against mempool-based MEV. The Base sequencer does not run a public mempool.
• Jupiter MEV Protection (Solana) — For Solana-based swaps routed through Jupiter, Mithril enables Jupiter's built-in MEV protection mode, which uses Jito bundles to ensure atomic execution without intermediary exposure.

5. Order Book Design

Mithril's on-platform order books (for tokenized equity and prediction markets) are designed to minimize MEV opportunities:

• CLOB Matching — The central limit order book matches orders by price-time priority. Orders are matched in the application layer before on-chain settlement, reducing the window for MEV extraction.
• Batch Settlement — Where possible, matched orders are batched into single settlement transactions, reducing per-trade on-chain exposure.
• Minimum Order Size — Minimum order sizes are enforced to prevent dust attacks and manipulation of the order book for MEV purposes.

6. Price Oracle Protection

Price feeds used for trade execution and NAV calculations are protected against manipulation:

• Multi-Source Aggregation — Prices are aggregated from multiple independent sources (29 data sources) including GeckoTerminal, PreStocks, Jarsy, CoinGecko, and internal order book data. No single source can unilaterally determine execution price.
• TWAP Fallback — For low-liquidity assets, time-weighted average prices (TWAP) over configurable windows are used instead of spot prices, dampening the impact of short-term price manipulation.
• Circuit Breakers — Automated circuit breakers pause trading when price movements exceed predefined thresholds (e.g., greater than 15% in 5 minutes), preventing cascading liquidations from manipulated prices.

7. Monitoring and Reporting

Mithril continuously monitors for MEV activity and reports significant incidents:

• MEV Detection — Automated systems analyze on-chain transaction ordering around user trades to detect potential sandwich attacks, front-running, and other MEV patterns.
• User Notifications — If MEV activity is detected affecting a user's trade, the user is notified with details of the detected activity and estimated impact.
• Transparency Reports — Mithril publishes periodic reports on MEV activity detected on the platform, including aggregate statistics on attack types, frequency, and mitigation effectiveness.

8. Limitations

While Mithril implements comprehensive MEV protections, users should be aware of inherent limitations:

• MEV protection cannot guarantee zero MEV extraction. Sophisticated validators and builders may still extract value through methods not covered by current protections.
• Private transaction relay services (Flashbots, Jito) are operated by third parties. Mithril does not control or guarantee the behavior of these services.
• Users who submit transactions directly through their own RPC providers, bypassing the Mithril frontend, do not benefit from the platform's MEV protections.

9. Contact

For questions about MEV protection or to report suspected MEV exploitation, contact security@mithril.pro.