Literature Review
Academic foundations, empirical benchmarks, and theoretical models informing Reforge
The design of Reforge builds upon extensive academic research across DeFi liquidation mechanics, Maximal Extractable Value (MEV), Proposer-Builder Separation (PBS), and consensus order-fairness.
Rather than treating liquidation as an isolated smart contract call, the literature demonstrates that liquidation is a multi-layered economic game played across mempools, block builders, and AMM secondary markets.
Recommended Reading Pathway
For researchers and engineers onboarding to the Reforge protocol, prioritize papers in this sequence:
Literature Categorization
DeFi Liquidations & Market Impact
Empirical analyses of Aave, MakerDAO, and Compound; fixed discounts vs. competitive auctions.
MEV & Priority Gas Auctions
Foundational works on transaction reordering, PGA bidding dynamics, and value quantification.
PBS, Private Order Flow & Latency
Builder monopolies, MEV-Boost integration advantages, and strategic timing delays.
Fair Ordering & Protocol Security
Byzantine consensus order-fairness (Aequitas), front-running taxonomy, and DeFi security SoKs.
Research Synthesis Matrix
| # | Paper / Study | Year | Key Finding | Relevance to Reforge |
|---|---|---|---|---|
| 1 | Flash Boys 2.0 | 2019 | Priority Gas Auctions (PGAs) cause consensus instability and time-bandit risks. | Proves that block positioning itself is a source of extractable profit. |
| 2 | Empirical Study of DeFi Liquidations | 2021 | Fixed liquidation discounts cause borrowers to lose excess collateral. | Establishes the necessity of value-based liquidation scoring. |
| 3 | Quantifying Blockchain Extractable Value | 2022 | $540M+ extracted via arbitrage, sandwiching, and liquidations. | Quantifies liquidations as major systemic MEV attack surfaces. |
| 4 | Order-Fairness for Byzantine Consensus | 2020 | Consistency and liveness do not prevent latency exploitation; introduces Aequitas. | Theoretical backing for batch windows over latency races. |
| 5 | SoK: Decentralized Finance | 2021 | Differentiates technical smart contract security from economic mechanism security. | Framework for analyzing liquidation incentive mechanisms. |
| 6 | SoK: DeFi Fundamentals & Risks | 2024 | Taxonomizes lending risks across market volatility, oracles, and liquidators. | Maps liquidation failure modes to external market structure. |
| 7 | Liquidation Mechanisms & Price Impacts | 2025 | Maker auctions reduced price impact (0.01% vs. 0.054%) and discounts (1.8% vs. 5%). | Direct validation: Competitive auctions dramatically cut collateral loss. |
| 8 | Integrated Builders in MEV-Boost | 2023 | Vertically integrated searcher-builders gain unfair 2nd-price auction advantages. | Highlights why public mempool liquidations become centralized. |
| 9 | Private Order Flows & Monopolies | 2024 | Top 3 block builders capture >95% of blocks through private order flow. | Shows that exclusive builder deals distort open liquidation competition. |
| 10 | Artificial Latency in PBS | 2023 | Validators strategically delay block proposals to capture 1.28% additional MEV. | Demonstrates that timing manipulation affects liquidation capture. |
| 11 | SoK: Front-Running Attacks | 2019 | Classifies attacks into displacement, insertion, and suppression. | Formal vocabulary for classifying liquidation frontrunning. |
| 12 | Ethereum MEV Docs | — | Official architectural specification of the MEV supply chain. | Standard terminology for searchers, builders, and gas golfing. |
| 13 | Recent 2026 Studies | 2026 | Transaction fees and gas prices materially determine OEV manipulation viability. | Informs Reforge's dynamic gas-aware scoring algorithm. |
Deep-Dives by Topic
Explore the full analysis for each thematic area: