Canton Strategic CEO warns MEV could add hidden costs to tokenized stocks

Maximum extractable value, or MEV, refers to profits made by influencing the order of blockchain transactions. In a sandwich attack, a trader buys an asset just before another user’s order and sells it afterward at a higher price, leaving the targeted user with a worse price despite no separate fee being shown.

“Issuers and market participants deserve an onchain market structure that prevents front-running and protects users from hidden costs,” Wendland said. He described validator tips as payments that can move some orders ahead of others. Digital Asset CEO Yuval Rooz raised related concerns in an article on X, “Front-Running Is Not Payment for Order Flow.” Rooz and Digital Asset hold minority stakes in Canton Strategic Holdings.

A Helius report recorded 1.55 million sandwich transactions by one Solana trading program in the 30 days ending January 5, 2025. The program made 65,880 SOL, worth about $13.43 million, in profit and paid 22,760 SOL, or $4.63 million, in Jito tips. Helius said 16 of the 20 tokens most frequently targeted originated on Pump.fun. The report covered one program, not all Solana activity, and distinguished bot profits from validator tips. Rooz cited the findings while noting that not all MEV is harmful; he separated sandwich attacks from arbitrage that can align prices across trading venues.

Wendland said Canton’s design limits access to pending transaction information and bars validators from taking payments to alter transaction order. The network’s documentation says parties receive only information relevant to them; the Global Synchronizer coordinates ordering, while operators see limited metadata rather than full transaction contents. Network usage fees are burned, and Canton Coin rewards support infrastructure operators and other contributors.

Canton Strategic completed its first tokenized share trades on November 4 under a US Securities and Exchange Commission exemption. Five North sold tokenized CNTN shares to DRW Cumberland, with Flowdesk providing liquidity through a permissioned trading pool and Fairmint, an SEC-registered transfer agent, maintaining the ownership record. Elsewhere, at least 67 companies had objected to OKXICE’s tokenization plans by November 5; the venue announced a November 23 launch for eligible US customers. Formation Securities has proposed Solana-based stock trading beginning in 2027, subject to applicable requirements, including shares of Exodus Movement, Forward Industries and Galaxy Digital. Wendland said institutions and regulators are making decisions that will shape onchain markets, as firms assess cost, speed and compliance.