Flashbots Wants to Raise $50 Million, Investors Must Pitch

Flashbots is seeking to raise $50 million with a $1 billion pre-money valuation, according to The Block, citing sources aware of the deal.

Pitch To Flashbots For A Chance to Invest

As they look to crowdfund, it has been revealed that Flashbots is doing a “reverse pitching” where interested investors have to pitch, not the other way around. In this arrangement, investors confident of Flashbots’ prospects must explain, in detail, why they should have a slot in this investment round.

Eventually, the goal is to raise between $30 million and $50 million in “equity investment,” pushing the firm’s valuation to unicorn status. Flashbot plans to split this investment round into two.

Although Paradigm didn’t respond publicly to the publication’s request for comment or comment on the inquiry, details reveal that the crypto fund was among the first to show interest. They participated in Flashbots’ seed sale in 2020. However, Flashbots didn’t indicate the amount raised in the seed sale. 

Flashbots is a research and development organization claiming to negate the effects of maximum extraction value (MEV) in account-based blockchains like Ethereum and the BNB Smart Chain (BSC).

Ethereum Price Chart | Source: ETHUSD on Trading View

Specifically, Flashbots focuses on Ethereum, where the costs of MEV can be high considering the high on-chain activity and the impact of gas fees, which is also relatively high versus other more scalable networks, including BSC. Their involvement, Flashbots’s documents explain, avoids the “existential risks MEV could cause to state-rich blockchains like Ethereum.”

Tackling MEV

MEV in blockchains is the maximum value that can be extracted from block production after validators, tasked with confirming transactions and securing the network, include or even re-order transactions in a block.

Unlike Bitcoin, where transaction order is given, in Ethereum and similar networks, ordering is haphazard. It means profit-seeking validators can prioritize transactions tagged with higher fees.

This explains why whenever the MEV in a block is higher than the network block reward, a validator can decide to re-order transactions in a block, creating vectors for possible centralization and exploitation.

Related Reading: ViaBTC Capital | Reasons Behind Solana’s Frequent Downtime: Design Flaws in the Gas Economy

Flashbots curbs this problem using MEV Boost. It is software allowing builders to auction blocks to validators, averting MEV centralization. Each party earns a fee for their contribution.

Flashbots’s recent open source tool, Single Unifying Auctions for Value Expression (SUAVE), further decentralizes and avails, to everyone, including competitors, the MEV Boost.

The reason for open-sourcing SUAVE is novel and meant to help the entire ecosystem grow stronger by proper decentralization.

In Devcon Bogota, Philip Daian of Flashbots said:

“So, we’re going to use MEV as this decentralized engine in the long term to make sure the users get the best execution on their trades in a way that will make TradFi look embarrassing very shortly.”

Feature Image by The Block, Chart from Trading View

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