The bundler is the new validator. In an L2's rollup stack, the sequencer batches transactions, but the bundler is the entity that wins the right to submit them to L1. This role controls the final ordering and captures the MEV (Maximal Extractable Value) from the entire batch.
layer-2-wars-arbitrum-optimism-base-and-beyond
Blog
Why the Bundler War is the Next Frontier of L2 Competition
The battle for L2 dominance is shifting from raw throughput to user experience. This analysis argues that the network with the most efficient, reliable, and decentralized bundler infrastructure will capture the next wave of adoption.
introduction
THE REAL BATTLEGROUND
Introduction
The competition for L2 supremacy is shifting from raw throughput to the economic engine of user transaction ordering.
Execution layer competition is saturated. Chains like Arbitrum and Optimism have converged on similar performance. The next differentiator is economic efficiency, determined by who builds the most profitable, reliable bundling infrastructure.
Bundlers dictate user experience and cost. A high-performing bundler network with PBS (Proposer-Builder Separation) minimizes L1 gas costs and latency. This is the infrastructure war that protocols like EigenLayer, AltLayer, and Espresso Systems are arming for.
Evidence: Ethereum's PBS reduced block proposal centralization by 60%. L2s that ignore this architectural lesson will leak value to third-party bundlers and offer a worse UX.
thesis-statement
THE BOTTLENECK SHIFT
The Core Argument
The competitive battleground for Layer 2s is moving from raw throughput to the economic and user experience layer of transaction ordering.
Bundlers control economic value. The entity that orders transactions (the bundler) extracts MEV, sets fees, and defines user experience. This makes the bundler market the new primary revenue stream and control point for L2s, surpassing sequencer revenue.
User acquisition becomes technical. Winning users requires superior transaction execution, not just lower gas fees. Protocols like UniswapX and 1inch Fusion already abstract gas and optimize routing; L2s must integrate similar intent-based architectures or lose relevance.
Modularity creates vulnerability. Decoupling execution (OP Stack, Arbitrum Nitro) from data availability (EigenDA, Celestia) standardizes the base layer. The differentiation shifts upstream to the bundling/sequencing layer, where projects like Espresso Systems and Astria are building competitive markets.
Evidence: The mempool is the new frontier. Flashbots' SUAVE aims to decentralize block building on Ethereum. On L2s, the equivalent pre-confirmation market—where bundlers compete to offer users speed and price guarantees—is where the next Arbitrum/OP will be decided.
market-context
THE BUNDLER WAR
The Current State of Play
The competition for user transactions is shifting from L1 gas wars to a new L2 battleground: the bundler network.
Bundlers are the new validators. In an ERC-4337 Account Abstraction world, the entity that bundles user operations and submits them to the EntryPoint contract controls transaction flow, MEV, and user experience. This role is more critical than a sequencer.
L2s are building proprietary bundlers. StarkWare's account_abstraction library and zkSync's native AA create walled gardens. This strategy locks in users and captures value, but fragments the ecosystem, contradicting AA's permissionless intent.
Third-party bundlers are the counter-play. Projects like Pimlico, Stackup, and Alchemy's aa-sdk are building generalized, chain-agnostic bundler services. Their success depends on out-executing L2-native bundlers on speed, reliability, and cost.
The war's first casualty is UX fragmentation. A user's experience now depends on their chosen bundler's RPC performance and fee logic. This creates a new vector for competition beyond pure TPS, measured in bundler latency and operation inclusion rates.
key-trends
THE NEXT FRONTIER OF L2 COMPETITION
Key Trends Driving the Bundler War
The race to capture user transactions is moving from the sequencer to the bundler, where the real value accrual and user experience battles will be fought.
01
The Problem: Stagnant Sequencer Revenue
L2 sequencers currently monetize a narrow slice of transaction value, primarily MEV and gas fees. This model is vulnerable to commoditization and fails to capture the full value of user intent.
- Sequencer revenue is a race to the bottom on base fees.
- MEV extraction is opaque and often adversarial to users.
- The real value is in the application logic and intent flow, which sequencers ignore.
<10%
Of Tx Value Captured
Commodity
Pricing Risk
02
The Solution: Bundlers as Intent Aggregators
Bundlers in ERC-4337 and similar frameworks (like UniswapX, CowSwap) don't just order transactions—they fulfill complex user intents. This turns them into high-margin service providers.
- Capture fees for cross-chain swaps, limit orders, and privacy services.
- Guarantee execution via solver networks and intent-based auctions.
- Monetize flow where the real economic surplus is generated.
10-100x
Higher Fee Potential
Intent-Based
Revenue Model
03
The Problem: Fragmented User Experience
Users manage wallets, sign transactions, and bridge assets across dozens of chains and dApps. This fragmentation kills adoption and creates security risks.
- Gas abstraction is unsolved; users still need native tokens.
- Cross-chain actions require manual steps across multiple UIs.
- Account management is siloed per chain or rollup.
5+ Steps
For Cross-Chain Swap
High Friction
User Onboarding
04
The Solution: Smart Accounts & Atomic Bundles
Bundlers enable smart accounts (ERC-4337) to sponsor gas and batch operations atomically. This allows for seamless, chain-abstracted experiences controlled by a single signer.
- Pay gas in any token via Paymaster integration.
- Batch multiple actions (swap, bridge, stake) into one user op.
- Unified identity across all EVM chains via a single contract account.
1-Click
Complex Actions
Any Token
Gas Payment
05
The Problem: Centralized Relayer Risk
Most current bundling is done by centralized relayers or the applications themselves (e.g., Uniswap Labs). This recreates the trusted intermediary problem that blockchains were built to solve.
- Censorship risk if a dominant relayer emerges.
- Single point of failure for critical transaction flow.
- Opaque order flow auctions without credible neutrality.
Trusted
Third Party
Censorship
Key Risk
06
The Solution: Permissionless Bundler Networks & SUAVE
The endgame is a decentralized network of competing bundlers, similar to validators or searchers. Projects like EigenLayer, AltLayer, and SUAVE are building the infrastructure for this.
- Permissionless participation for bundlers and searchers.
- Credibly neutral order flow auctions via shared mempools.
- Economic security derived from staking or reputation systems.
Decentralized
Network Goal
SUAVE
Key Protocol
STRATEGIC ARCHITECTURE
L2 Bundler Strategy Matrix
Comparative analysis of dominant bundler strategies shaping L2 user acquisition and revenue capture.
| Core Metric / Capability | Native L2 Bundler (e.g., Arbitrum, zkSync) | Third-Party Aggregator (e.g., Biconomy, Pimlico) | Intent-Based Solver (e.g., UniswapX, Across) |
|---|---|---|---|
Primary Revenue Source | Sequencer MEV + Base Fee | Service Fee Premium | Optimization Slippage Capture |
User Onboarding Friction | High (Direct Wallet Integration) | Low (SDK/API Abstraction) | None (Declarative Intent) |
Typical Fee Premium | 0% | 5-15% | Negative (Better-than-Pool Price) |
Cross-Chain Capability | False | True (via Bridges) | True (Native via Solvers) |
Time-to-Finality (Target) | < 1 sec (L2 Conf) | 2-12 sec (Dep. on Chain) | ~1 min (Auction Resolution) |
Gas Sponsorship Model | Paymaster Integration | True (Core Feature) | True (Sponsored by Solver) |
Architectural Control | Full (Centralized Sequencer) | Partial (Relayer Network) | Minimal (Open Solver Network) |
Key Strategic Risk | Regulatory (Sequencer as SEC Target) | Extractability (Fee Premium Competition) | Solver Collusion & MEV |
deep-dive
THE REAL BATTLEGROUND
The Stakes: More Than Just Gas
Bundler competition will determine L2 sovereignty, user experience, and the future of application-specific rollups.
Bundlers control transaction ordering. This is the new MEV frontier for L2s, moving beyond simple gas auctions. The entity that sequences transactions captures value and dictates network latency.
User experience becomes a protocol feature. Fast, reliable bundling is a direct product differentiator. Users choose chains where their swaps on Uniswap or mints on Zora confirm predictably.
The winner defines the L2 stack. A dominant bundler network like EigenLayer or AltLayer could commoditize execution layers, turning rollups into featureless commodities.
Evidence: Arbitrum's BOLD dispute protocol exists to prevent a malicious sequencer from censoring or reordering transactions, proving that sequencer trust is non-trivial.
risk-analysis
WHY THE BUNDLER WAR IS THE NEXT FRONTIER OF L2 COMPETITION
Risks and Bear Case
The race for user transactions is shifting from block space to the mempool, where the entity controlling the bundler holds immense power over user experience, cost, and censorship.
01
The Centralized Mempool Problem
Bundlers are the new sequencers. A single, dominant bundler (like a centralized RPC provider) creates a single point of failure and censorship. This re-introduces the very centralization risks L2s were built to solve.\n- MEV Extraction: A centralized bundler can front-run, back-run, and censor user transactions for profit.\n- Censorship Vector: Governments or regulators can pressure a single entity to block transactions.
1
Point of Failure
100%
Control
02
The Economic Capture Risk
Bundlers capture the priority fee market. If bundling becomes a winner-take-most game (like mining pools), users face higher costs and reduced competition. This creates a new rent-seeking layer between users and L1.\n- Fee Inflation: Bundlers can artificially inflate gas prices by controlling transaction ordering.\n- Staking Cartels: Bundlers with large staked ETH positions could dominate the market, mirroring L1 validator centralization.
$B+
Fee Market
Oligopoly
Market Structure
03
Fragmentation & Interoperability Hell
Each L2 rollup will have its own bundler ecosystem and mempool rules. This fragments liquidity and complicates cross-chain intent execution, undermining the composability promise of Ethereum.\n- Siloed Liquidity: A user's intent on Arbitrum cannot be efficiently fulfilled with liquidity on Optimism.\n- Protocol Balkanization: Projects like UniswapX, Across, and LayerZero must integrate with dozens of bespoke bundler networks, increasing complexity and failure points.
10+
Siloed Networks
Fragmented
User Experience
04
The Bear Case: Bundlers Kill L2 Value Accrual
If the bundler layer captures all economic value, L2 native tokens become governance-only tokens with weak fee capture. The value flows to stakers of the underlying chain (Ethereum) and the bundler operators, not the L2.\n- Fee Drain: L2 sequencer fees are competed away by bundlers, leaving the L2 with thin margins.\n- Token Utility Erosion: Without a clear claim on transaction fees, the investment thesis for L2 tokens weakens significantly.
0%
Fee Capture
Governance
Token Utility
future-outlook
THE BATTLE FOR THE USER
Future Outlook: The 2025 Bundler Landscape
The competition for user transactions will shift from L2s to the bundlers that control their flow.
Bundlers become the gatekeepers. The entity that aggregates and submits UserOperations controls transaction ordering and MEV extraction. This creates a direct revenue stream and influence over user experience, shifting power from the L2 sequencer to the ERC-4337 bundler network.
Vertical integration is inevitable. Major L2s like Arbitrum and Optimism will launch native bundlers to capture this value and protect user flow. This mirrors the rollup-centric roadmap where the chain stack controls its own economic layer.
Specialized bundlers will fragment the market. Expect dedicated bundlers for specific intents, like NFT minting via Blur or cross-chain swaps via UniswapX. This specialization creates a modular intent layer atop the base bundling infrastructure.
The winner is the best UX, not the lowest fee. While fee competition exists, the dominant bundlers will win through superior reliability, privacy via services like SUAVE, and seamless integration with popular wallets and dApps.
takeaways
THE BUNDLER WAR
Key Takeaways for Builders and Investors
The race for user operations is shifting from L1 block space to L2 bundler infrastructure, creating a new vector for moats and revenue.
01
The Problem: MEV is L2's Next Leakage
Bundlers control transaction ordering, creating a new MEV surface. Without proper design, value from L2 users is extracted by off-chain searchers, undermining the chain's value proposition.\n- Front-running and sandwich attacks migrate from L1.\n- Revenue leaks to third-party bundlers instead of the L2's sequencer/treasury.
>90%
Of L2s Exposed
$100M+
Annual Leakage
02
The Solution: Native, Sovereign Bundlers
L2s must operate their own high-performance bundler infrastructure to capture MEV and ensure reliable UX. This turns a cost center into a profit center and a defensive moat.\n- Guaranteed inclusion for user ops, preventing censorship.\n- Revenue recycling via gas subsidies or treasury funding, similar to Coinbase's Base bundler strategy.
~500ms
Target Latency
10-30%
Revenue Capture
03
The Battleground: Intent-Based Architectures
The real competition is in solving for user intent, not just bundling transactions. Projects like UniswapX, CowSwap, and Across are winning by abstracting complexity. L2s that integrate native intent solvers will dominate.\n- Better UX: Users sign outcomes, not transactions.\n- Efficiency Gains: Solvers like SUAVE compete for optimal execution, improving price.
50-80%
Gas Savings
1-Click
Complex Swaps
04
The Metric: Time-to-Finality (TTF) is King
For mass adoption, perceived speed matters more than theoretical TPS. A bundler's job is to minimize the delay between user action and irreversible settlement. This requires tight integration with the sequencer and prover.\n- Fast pre-confirmations from the sequencer are critical.\n- Proof latency becomes the ultimate bottleneck, highlighting the need for performant provers like Risc Zero or SP1.
<2 sec
Target TTF
100x
UX Improvement
05
The Risk: Centralization & Regulatory Attack Surface
Operating a dominant native bundler creates a central point of control and failure. This invites regulatory scrutiny as a potential money transmitter or securities exchange. Decentralization is a compliance shield.\n- OFAC-compliance becomes a protocol-level decision.\n- Validator/Bundler sets must be permissionless to avoid SEC classification.
High
Regulatory Risk
Single Point
Of Failure
06
The Investment Thesis: Vertical Integration Wins
The winning L2 stack will tightly integrate the sequencer, bundler, prover, and bridge. Look for teams building all four, like zkSync's native bundler or Starknet's Madara sequencer. Fragmented stacks lose to cohesive ones.\n- Economic alignment: Value accrues to the L2 token.\n- Superior UX: Seamless cross-chain intents via native bridges like LayerZero or Hyperlane.
$10B+
Vertical Value
3-5x
Efficiency Gain
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