Why Arbitrum's Mempool Design is Inadequate for True HFT

Arbitrum's public, first-price auction mempool broadcasts all transactions, creating a predictable ~200-500ms window for generalized frontrunners (MEV bots) to exploit. This is anathema to HFT strategies that rely on speed and secrecy.

• Sandwich attacks are trivial on visible order flow.
• Time-to-inclusion is non-deterministic, killing latency-sensitive arbitrage.

True HFT requires direct integration with searchers and builders via private RPC endpoints (e.g., BloXroute, Titan). This bypasses the public mempool entirely. Protocols like UniswapX and CowSwap abstract this via intent-based systems and solver networks.

• Sub-100ms private transaction routing.
• Guaranteed inclusion via builder agreements or preconfirmations.

All transactions must pass through Arbitrum's single, permissioned sequencer. This creates a central point of failure and latency addition. While decentralized sequencer sets are planned, the current design cannot match the parallel processing of Solana or dedicated HFT chains like dYdX v4.

• Sequencer queuing adds variable, non-trivial delay.
• No native cross-domain flash loans for atomic L1->L2->L1 arbitrage.

Arbitrum is optimizing for transaction execution, not outcome fulfillment. The future is intent-centric architectures (e.g., Anoma, SUAVE) where users express a desired state (e.g., "buy X token at best price") and a decentralized network of solvers competes to fulfill it optimally. This is a paradigm shift Arbitrum's mempool cannot natively support.

• Mempool becomes irrelevant for matched intents.
• Optimal execution via solver competition, not gas auctions.

Solana's design, with its local fee markets and Jito auction for block space, provides a more HFT-native environment. Searchers bid for priority on specific state paths, enabling predictable, microsecond-level scheduling. This contrasts with Arbitrum's global, first-price auction that creates congestion spillover.

• State-specific priority fees prevent unrelated congestion.
• Jito bundles offer guaranteed, ordered execution.

For protocols requiring true HFT (e.g., dYdX, Hyperliquid), the answer is a dedicated app-specific rollup or L1. This allows for a custom mempool (or none), a tailored consensus mechanism (e.g., Tendermint), and validator/sequencer sets optimized for the application's exact latency and throughput needs. Arbitrum's general-purpose design is the trade-off.

• Tailored state machine for single-app efficiency.
• Custom validator incentives for ultra-low latency.

Arbitrum's sequencer orders transactions in strict, first-come-first-served sequence. This creates a publicly observable queue where any pending transaction is a sitting duck for Generalized Frontrunning (MEV). HFT strategies requiring atomic execution are impossible.

• Target for Snipers: Every intent is exposed for ~500ms before confirmation.
• No Atomic Composability: Cannot guarantee multi-step trades execute as a single unit.
• Inefficient Price Discovery: Latency arbitrage between L1 and L2 creates predictable, extractable spreads.

Protocols like Flashbots SUAVE, CoW Swap, and UniswapX bypass public mempools entirely. They route user intents to a private network of searchers and solvers who compete in sealed-bid auctions for optimal execution. This is the foundational model for on-chain HFT.

• Frontrunning Resistance: Transaction logic is hidden until settlement.
• Price Improvement: Solvers compete to provide better-than-market prices.
• Cross-Domain Execution: Native support for intents across chains (e.g., via Across, LayerZero).

Chains like Solana and Sei, and specialized L2s like Eclipse, architect for sub-second block times and instant, deterministic finality. This reduces the latency arbitrage window to near-zero, making traditional frontrunning economically non-viable and enabling true HFT cycles.

• Sub-Second Finality: Blocks are produced in 400ms or less.
• Parallel Execution: Transactions without state conflicts process simultaneously.
• Native Order Book Support: Sei and dYdX Chain offer centralized-exchange-grade matching engines.

Networks like EigenLayer's FHE Coprocessor and Aztec are pioneering encrypted mempools. Transactions are submitted as homomorphic ciphertext, only decrypted by the validator set after inclusion in a block. This makes the mempool cryptographically opaque to adversaries.

• Complete Privacy: Transaction content is hidden from searchers and public RPCs.
• Fair Ordering: Validators see only encrypted blobs, reducing bias.
• Future-Proof: Aligns with regulatory trends toward transaction privacy.

Arbitrum's current single, permissioned sequencer (Offchain Labs) is a bottleneck for latency and a centralization risk. It creates a single point of censorship and downtime risk. For HFT, reliability and uptime are non-negotiable; a centralized operator is antithetical to this.

• Censorship Risk: Sequencer can arbitrarily delay or drop transactions.
• No Redundancy: If the sequencer goes down, the chain halts.
• Latency Floor: All transactions must route through a single, non-competitive gateway.

The endgame is decentralized sequencer sets using consensus like Narwhal & Bullshark (Sui/Aptos) or CometBFT. Multiple nodes propose, order, and execute blocks in parallel, eliminating the single-point bottleneck. This provides liveness guarantees and competitive latency essential for institutional HFT.

• Fault Tolerance: Chain progresses as long as 2/3 of sequencers are honest.
• Reduced Latency: Multiple proposers reduce the 'wait-for-leader' delay.
• Censorship Resistance: Transaction inclusion requires collusion of the majority.

Arbitrum's mempool is fully public, broadcasting all pending transactions. This creates a predictable, sequential queue where sophisticated bots can front-run and sandwich user trades with near-perfect success. The design prioritizes decentralization over execution quality for traders.

• Predictable Ordering: Transaction order is determined by gas price and arrival time.
• MEV Extraction: Creates a $100M+ annual opportunity for searchers at user expense.
• No Privacy: Every intent is visible, making advanced strategies like statistical arbitrage vulnerable.

Arbitrum's single, permissioned sequencer is the sole point of transaction ordering. This creates a critical bottleneck and trust assumption for HFT. While it provides fast inclusion, it offers no guarantees on execution and is vulnerable to downtime or censorship, breaking the low-latency feedback loop required for trading.

• Single Ordering Node: All transactions flow through one entity (Offchain Labs).
• No Execution Guarantees: Fast inclusion ≠ best execution; the sequencer does not optimize for price.
• ~1-4 sec Latency: Inbound latency from user to sequencer is still too high for sub-second strategies.

True HFT requires transaction privacy and guaranteed execution. The fix is not tweaking Arbitrum's core, but bypassing its public mempool entirely using private infrastructure, similar to Flashbots' SUAVE or bloxroute's private relays.

• Private RPC Endpoints: Send transactions directly to the sequencer, bypassing the public gossip network.
• Encrypted Bundles: Use EIP-4844 blobs or secure enclaves to hide intent until execution.
• Proposer-Builder Separation (PBS): Separate transaction ordering from block building to mitigate centralization risk.

The endgame for HFT is abandoning transaction submission altogether. Protocols like UniswapX, CowSwap, and Across use an intent-based model where users express a desired outcome (e.g., "sell X for at least Y"). Solvers compete off-chain to fulfill it, submitting only the winning, settled bundle. This eliminates frontrunning and optimizes for price, not gas.

• Paradigm Shift: From broadcasting transactions to broadcasting desired states.
• Competitive Execution: Solvers use private liquidity and MEV recapture to improve user price.
• Native Cross-Chain: Intents abstract away the underlying chain, making Arbitrum just one liquidity source.