Fortifying the Democratization of MEV Extraction
[Please read our Content Disclaimer before reading the rest of this post.](https://> Searchers now no longer have to compete with builders for getting their transactions included in anymore: they can simply submit directly to the relay and ‘burn’ their option for ensuring their bundle is included.)
MEV Options Auction Market
- It will split the block in two parts which will be auctioned separately.
- Splitting the auction enables backward compatibility with mev-boost.
- It will implement a future market for blockspace inclusion using a call market.
This is the first version of, or
MOAMand arguably the most heavily packed with stuff, as we need to reach a critical mass to deliver a useful MVP.
MOAM block structure
In MOAM, we divide a block in two parts:
- One part, called \alpha - also referred to as
above- represents the top part of the blockspace. Economically, this is where competitive searchers want to place their transactions (e.g. for arbitrages etc.) - The other part, called \beta - also referred to as
below- represents the rest of the blockspace. Economically, this is where low-priority transactions - direct transfers, low volume swaps, some kind of intents, etc. - would go.
The rationale for this is simple: above and below represent two very different markets: The first serves strategic actors, whereas the second serves ‘everyone else’ - people not interested in speculation that just want to transact, e.g., to pay for stuff.
above is a very time sensitive (re: latency) kind of blockspace, as mev-rich txs often come in last minute. As such, designing a futures market for above is very hard if not totally inappropriate, and outside the scope of MOAM for now.
On the other hand, below is not very time sensitive, and designing a futures market for it is easier. The idea is this: Since we run our own validators, we will know 2 epochs in advance in which slots we will mint a block. So, we can sell that blockspace about 2 epochs in advance, providing a futures market for below. The following diagram shows an example of how this would work. Crucially, we want users to be able to transact, that is, to be able to resell the futures on a secondary market.
Beyond 2 Epochs requires probablistic estimations, though this is planned to be supported, we keep it simple for now.
Economically, splitting the block in two parts makes sense as it fractures a market where different use cases are conflated**: In a nutshell, at the moment builders have problems serving ‘common people’s needs’ in Ethereum as they have to compete with ultra-optimized searchers like Beaverbuild.** On the other hand, strategic searchers like Beaverbuild often have to fill the block with ‘strategically irrelevant txs’ as they have to purchase more blockspace than they need.
Searchers now no longer have to compete with builders for getting their transactions included in anymore: they can simply submit directly to the relay and ‘burn’ their option for ensuring their bundle is included.
It is clear that this homogenization is a forced one: Different players that want to do different things have to compete for the same thing. Fracturing the block solves this.
Timeline
Details follow. We need to stick to a very tight timeline, so we already split the work into different ‘packages’. Below is a model of the outline for technical implementation. We expect relay testing to start at the end of the month.
If you are a searcher or builder whom we have not spoken to yet, you can always reach out to me at: mailto: sam@manifoldfinance.com telegram: @sambacha