Why Private Mempools Are a Stopgap, Not a Solution

Sealed-bid auctions in private mempools centralize transaction flow to a few dominant builders like Flashbots and Jito Labs. This creates a new, opaque layer of rent-seeking intermediaries who control >80% of Ethereum block space.\n- Central Point of Failure: Censorship and regulatory pressure become trivial.\n- Economic Capture: Value accrues to the sequencer, not the user or validator.

The endgame is moving from transaction execution to intent declaration. Protocols like UniswapX, CowSwap, and Across let users specify a desired outcome, not a transaction path. This shifts competition to solvers, not block builders.\n- User Sovereignty: Express what you want, not how to do it.\n- Efficient Routing: Solvers compete across chains and liquidity venues for best execution.

Long-term viability requires infrastructure that is permissionless and verifiably fair. This means shared sequencer networks like Astria or Espresso, and force-inclusion mechanisms that prevent censorship.\n- Decentralized Builders: Anyone can participate in block building.\n- Proposer-Builder Separation (PBS): Enshrined at the protocol level to prevent capture.

Private order flow is routed to a single trusted sequencer (e.g., Flashbots SUAVE, bloXroute). This creates a single point of failure and censorship.\n- Centralized Trust: Users must trust the sequencer operator not to front-run or censor them.\n- Systemic Risk: A sequencer outage or exploit halts all private transactions, creating a single point of failure.

Private pools segment liquidity from the public market, harming price discovery and execution quality for retail.\n- Worse Execution: Private orders miss the composability of public liquidity from AMMs like Uniswap or aggregators like 1inch.\n- Two-Tiered System: Creates a privileged class of users (institutions, bots) with better pricing, undermining DeFi's open access promise.

A centralized sequencer controlling private order flow is a compliant entity that regulators can pressure or shut down.\n- Censorship Vector: Governments can mandate transaction blacklisting (e.g., Tornado Cash), enforced at the sequencer level.\n- Protocol Neutrality Lost: Turns a credibly neutral infrastructure layer into a regulated financial intermediary, breaking the trustless model.

Private mempool revenue models are unstable. Extracted MEV value declines as adoption increases, threatening operator incentives.\n- Zero-Sum Game: MEV is largely redistributive; more private flow reduces the extractable surplus, collapsing fees.\n- Rent Extraction: Operators become rent-seekers on a shrinking pie, leading to fee inflation or service degradation.

Superior solutions like intent-based architectures (UniswapX, CowSwap, Across) and shared sequencing networks (Espresso, Astria) make private pools obsolete.\n- User-Centric: Intents declare what you want, not how, allowing solvers to compete for best execution across all liquidity sources.\n- Decentralized Execution: Shared sequencers decentralize block building, eliminating the trusted operator problem entirely.

Every new Layer 2 (Arbitrum, Optimism, zkSync) creates its own MEV market and private pool dynamics, fracturing the solution space.\n- No Interop: A private pool on Arbitrum doesn't protect a user on Base. This requires cross-chain MEV solutions like LayerZero, adding complexity.\n- Combinatorial Explosion: Managing private transactions across 10+ L2s becomes a user and developer nightmare.

Delegating transaction ordering to a single trusted sequencer (e.g., Flashbots SUAVE, EigenLayer) recreates the very problem it solves. You trade miner extractable value for sequencer extractable value. This creates a single point of failure and censorship, undermining decentralization guarantees.

• New Trust Assumption: Users must trust the sequencer's fairness.
• Regulatory Attack Surface: A centralized choke point is easier to regulate or compromise.

Private channels bifurcate liquidity between public and private pools. This harms price discovery and increases slippage for ordinary users left in the toxic public mempool. Protocols like Uniswap and Aave suffer from less efficient markets, as large arbitrage and liquidation flows move to private venues.

• Worse Execution: Public pool users get inferior prices.
• Protocol Revenue Loss: MEV that could be captured via MEV-Boost or CowSwap-style auctions leaks to private operators.

The real solution is moving from transaction-based to intent-based systems. Users specify what they want (e.g., "best price for 100 ETH"), not how to do it. Solvers (like in UniswapX, CowSwap, Across) compete to fulfill the intent, baking MEV competition into the protocol layer. This eliminates the need for mempool hiding.

• User Sovereignty: No need to trust a single sequencer's execution.
• Efficiency Gain: Market structure naturally optimizes for best outcome.