Why Encrypted Mempools Create New Trust Assumptions

Encrypted mempools break transparency. Public mempools are a core security primitive, allowing validators and users to audit transaction ordering and prevent front-running. Encrypting transactions before inclusion removes this public audit trail.

Trust shifts to the encryptor. Users must now trust the entity performing the encryption—typically the sequencer or a specialized service like Shutter Network—not to censor, reorder, or decrypt transactions maliciously.

This creates new attack vectors. The system's security depends on the proper execution of a Threshold Encryption scheme and the economic security of its keyholders, introducing risks absent in transparent systems like Ethereum's base layer.

Evidence: Protocols like EigenLayer and Espresso Systems are building cryptoeconomic frameworks to secure these new roles, acknowledging that encryption alone is insufficient without verifiable trust guarantees.

Encryption shifts the trust vector. Traditional mempools expose user transactions to validators, creating a censorship risk from the consensus layer. Encrypted mempools like EigenLayer's MEV Blocker or Flashbots SUAVE hide transaction data, but this requires a new, trusted third party to process the ciphertext.

You now trust the relay network. This relay infrastructure must be honest and available to decrypt, order, and forward transactions. The failure modes shift from a Sybil-resistant validator set to a smaller, potentially centralized set of relay operators, creating a new single point of failure.

The trade-off is explicit. You exchange the known, economically-aligned risk of validators for the operational and coordination risk of relays. Protocols like Anoma and Shutter Network attempt to mitigate this with threshold cryptography, but the trust assumption is fundamentally different and often less battle-tested than Proof-of-Stake security.

Relays become trusted intermediaries. Encrypted mempools like those proposed by EigenLayer or Flashbots SUAVE require a central entity to receive, sequence, and forward transactions. This creates a single point of failure and censorship, reversing decentralization gains.

New MEV attack vectors emerge. A malicious relay can front-run its own users with impunity, as transaction contents are opaque to the public. This is a more severe trust violation than traditional MEV extraction by searchers.

Relay centralization is economically inevitable. The role demands high capital for bonding, sophisticated infrastructure, and deep chain integration. This favors large, established players like Coinbase or Jump Crypto, not a permissionless set of actors.

Evidence: In Ethereum's PBS, over 90% of blocks are built by three dominant builders, demonstrating the natural centralization pressure in trusted sequencing roles.

Trust Transference is Inevitable: Encrypted mempools do not eliminate trust; they relocate it. The trust model migrates from the entire validator set observing public transactions to a smaller, specialized network of SGX/TEE operators or MPC participants who must correctly process and forward encrypted data.

New Centralization Vectors Emerge: This creates a centralization bottleneck. The security of the entire encrypted flow depends on the integrity and liveness of a few key entities, like Flashbots' SUAVE network or a specialized sequencer, introducing systemic risk if those operators collude or fail.

The Cost of Privacy: The trust-minimization goal becomes a balancing act. Protocols must weigh the privacy benefits against the new, concentrated trust assumptions. This is analogous to the trade-off in intent-based systems like UniswapX, where user convenience depends on solver honesty.

Evidence: The failure of a single TEE provider or a flaw in its attestation mechanism, as historically seen with Intel SGX, would compromise all transactions relying on that encryption layer, demonstrating the fragility of this new trust anchor.