MEV is no longer monolithic. The rise of Arbitrum, Optimism, and Base has fractured the single Ethereum mempool into competing, isolated markets. Each chain now operates its own MEV supply chain with distinct searchers, builders, and relay operators.
layer-2-wars-arbitrum-optimism-base-and-beyond
Blog
The Cost of Fragmentation: MEV Silos Across Arbitrum, Optimism, Base
Each major L2's centralized sequencer has spawned an independent, opaque MEV market. This fractures liquidity, breaks composability, and hands disproportionate power to a small cadre of extractors. We analyze the systemic risks.
introduction
THE SILOED FRONTIER
Introduction
The proliferation of L2s has created isolated MEV markets, fragmenting liquidity and extracting value from users and builders.
Fragmentation creates arbitrage silos. Cross-chain arbitrage between L2s via bridges like Across or Stargate is a primary MEV source, but value capture is inefficient. Searchers on Arbitrum cannot directly compete for opportunities on Base, creating localized monopolies and higher costs.
Builders face operational bloat. Protocols like Uniswap must now manage separate MEV mitigation strategies (e.g., CowSwap on Mainnet, UniswapX on chains) and fee structures for each L2. This fragmented integration increases overhead and protocol risk.
Evidence: Over 90% of cross-L2 arbitrage MEV is captured by a handful of specialized searchers per chain, while generalizable tools like Flashbots' SUAVE remain nascent, proving the market's immaturity.
key-trends
THE COST OF FRAGMENTATION
Executive Summary: The Three Fractures
The L2 ecosystem's success has balkanized MEV, creating isolated markets that harm users and extract value from the broader network.
01
The Problem: Isolated Searcher Cartels
Each major L2 (Arbitrum, Optimism, Base) has spawned its own insular MEV ecosystem. Searchers operate in silos, leading to reduced competition and higher extractable value per chain. This fragmentation prevents the formation of a unified, efficient cross-chain MEV market.
3-5x
Less Searcher Competition
$100M+
Annual Extracted Value
02
The Solution: Shared Sequencing & Cross-Chain PBS
Protocols like Espresso and Astria propose a shared sequencer layer to unify block production. Combined with cross-chain Proposer-Builder Separation (PBS), this creates a single, competitive market for block space across L2s, driving down costs and redistributing MEV.
~40%
Potential Cost Reduction
1 Market
Unified Auction
03
The Consequence: User Experience Tax
Fragmented MEV directly impacts end-users through worse swap prices and failed transactions. Without a unified liquidity and arbitrage landscape, LPs post wider spreads, and users pay a hidden tax on every cross-L2 action via bridges like LayerZero and Across.
15-30 bps
Slippage Premium
5-10%
TX Failure Rate
04
The Arbitrage: Inefficiency as Opportunity
The very fragmentation that harms users creates a massive cross-chain arbitrage landscape. This inefficiency is a multi-billion dollar opportunity for protocols that can solve the coordination problem, positioning entities like UniswapX with its intent-based model as potential winners.
$2B+
Arb Opportunity
~500ms
Inefficiency Window
thesis-statement
THE FRAGMENTATION TRAP
The Core Argument: Sequencer = Single Point of MEV Capture
Rollup fragmentation creates isolated MEV silos, centralizing extraction power in each chain's sequencer.
Sequencer is the MEV nexus. The sequencer's exclusive right to order transactions makes it the mandatory, centralized gateway for all extractable value on its rollup, from arbitrage to liquidations.
Fragmentation multiplies the problem. Each new chain—Arbitrum, Optimism, Base—creates its own sequencer monopoly, fracturing the MEV landscape into inefficient, non-composable silos.
This is a structural flaw. Unlike Ethereum's permissionless validator set, a single sequencer controls the entire MEV supply chain, preventing competition from builders like Flashbots or protocols like CoW Swap.
Evidence: Over 99% of Arbitrum and Optimism blocks are produced by their respective, centralized sequencers, creating billions in potential MEV under single-entity control.
THE COST OF FRAGMENTATION
The MEV Silo Matrix: A Comparative View
A feature and economic comparison of MEV infrastructure across leading L2s, highlighting the technical and financial implications of siloed auction markets.
| Feature / Metric | Arbitrum | Optimism | Base |
|---|---|---|---|
Native MEV Auction Protocol | SUAVE (Incoming) | MEV-Boost (OP Stack) | MEV-Boost (OP Stack) |
Primary Block Builder | Flashbots (via Relay), beaver.build | Flashbots (via Relay), beaver.build | Flashbots (via Relay) |
Avg. Builder Payment to Proposer | 0.1-0.15 ETH | 0.05-0.08 ETH | 0.02-0.05 ETH |
Proposer-Builder Separation (PBS) | |||
Cross-Domain MEV Flow (to L1) | Via L1 Finality (~12 min) | Via L1 Finality (~12 min) | Via L1 Finality (~12 min) |
Cross-Rollup MEV Flow (L2-to-L2) | |||
Avg. Searcher Cost per Bundle | $15-40 | $8-25 | $5-20 |
Dominant MEV Type | Liquidity Arbitrage (Uniswap, Camelot) | Liquidity Arbitrage (Uniswap, Velodrome) | Social & NFT Arb (Friend.tech, Blur) |
deep-dive
THE MEV SILO
The Ripple Effects: Beyond Just High Slippage
L2 fragmentation creates isolated MEV ecosystems that extract value and degrade the security model of the underlying settlement layer.
Fragmentation isolates MEV extraction. Each L2—Arbitrum, Optimism, Base—operates a distinct mempool and sequencer. This prevents cross-chain MEV strategies that require atomic execution, forcing searchers to specialize and reducing overall competition. The result is higher, less efficient extraction per chain.
Siloed MEV weakens Ethereum's security. The value of proposer-builder separation (PBS) and block-building competition on Ethereum L1 is diminished when high-value transactions are captured and settled off-chain. This reduces the economic incentive to run performant, honest validators on the base layer.
Evidence: Flashbots' SUAVE aims to unify these silos, but its adoption is nascent. Meanwhile, protocols like Across and LayerZero enable intent-based routing that bypasses L2 sequencers, creating a new front in the MEV wars as searcvers compete on settlement guarantees instead of latency.
risk-analysis
MEV SILOS
The Bear Case: What Fragmentation Unlocks
L2 fragmentation doesn't just split liquidity—it creates isolated, extractive markets for Miner/Maximal Extractable Value, where arbitrageurs win and users lose.
01
The Problem: Isolated Liquidity, Amplified Slippage
Cross-chain arbitrage between Arbitrum, Optimism, and Base is slow and expensive. This creates persistent price dislocations.\n- DEX pools on each chain act as independent, shallow markets.\n- A large cross-L2 swap can incur >5% slippage from sequential hops.\n- This inefficiency is a direct subsidy to professional arbitrage bots who can afford the latency and gas.
>5%
Slippage
3+
Hop Latency
02
The Solution: Intent-Based Cross-Chain Auctions
Protocols like UniswapX, CowSwap, and Across abstract routing. Users submit intent ("I want X token on Base"), and a network of solvers competes to fulfill it optimally.\n- MEV is converted into better prices via solver competition.\n- Atomic composability is achieved via bridging layers like LayerZero or Chainlink CCIP.\n- The user gets a guaranteed rate, while solvers capture the cross-chain arb profit.
~500ms
Solver Race
Best Rate
User Guarantee
03
The New Risk: Solver Cartels & Centralization
The efficiency of intent systems depends on solver competition. High capital and technical requirements can lead to centralization.\n- A dominant solver on Arbitrum could collude with one on Base, forming a cross-chain MEV cartel.\n- They could withhold liquidity or manipulate auctions, recreating the extractive dynamics they were meant to solve.\n- This shifts trust from validators to a few privileged searcher-solver entities.
Oligopoly
Risk
Trust Shift
New Vector
04
The Architectural Imperative: Shared Sequencing
The endgame is not better bridges, but shared infrastructure that makes L2s behave as one. Shared sequencers (e.g., Espresso, Astria) order transactions across multiple rollups.\n- Enables native cross-rollup arbitrage in a single block.\n- Eliminates the latency advantage of specialized bots, democratizing MEV capture.\n- Turns fragmentation from a market inefficiency into a parallel execution benefit.
Atomic
Cross-Rollup
Levels Field
MEV Capture
future-outlook
THE COST OF FRAGMENTATION
The Path Forward: From Silos to Shared Order Flow
MEV extraction is being re-invented in parallel across L2s, creating isolated markets that reduce efficiency and increase user costs.
MEV Silos Replicate Inefficiency. Each major L2—Arbitrum, Optimism, Base—operates a separate MEV supply chain. This forces searchers and builders to deploy capital and infrastructure multiple times, a direct replication of Ethereum's pre-PBS problems.
Fragmentation Reduces Liquidity. A searcher's capital on Arbitrum is idle on Optimism. This capital inefficiency increases spreads and slippage for end-users, as arbitrage opportunities between chains or within DEX pools are executed slower and less completely.
Protocols Are Building Walls. Native sequencers on these chains act as centralized MEV gatekeepers, creating captive markets. Projects like Aevo on Arbitrum or Uniswap on Base generate order flow that is captured and monetized within a single chain's ecosystem.
Evidence: Flashbots' SUAVE aims to unify this by creating a shared cross-domain block space market, but its adoption depends on L2s ceding control—a major political hurdle given the revenue at stake.
takeaways
MEV SILOS ACROSS L2S
TL;DR: The Fragmentation Bill
Rollup proliferation has created isolated MEV markets, increasing extractable value for searchers while degrading execution quality for users.
01
The Problem: Cross-Chain MEV is a Black Box
Searchers exploit price differences between Arbitrum, Optimism, and Base independently. This creates inefficient price discovery and forces users to pay for latency races on each chain.\n- Value Leakage: MEV is extracted multiple times for a single cross-chain intent.\n- Worse Execution: No global view leads to suboptimal fills and stale quotes.
3-5x
More Extractable Value
>100ms
Latency Penalty
02
The Solution: Shared Sequencing & Intents
Protocols like Astria and Espresso propose a neutral sequencing layer. Combined with intent-based architectures (UniswapX, Across), this allows for atomic cross-rollup execution.\n- Global Order Flow: Searchers compete on a unified liquidity landscape.\n- User Sovereignty: Intents specify outcomes, not transactions, shifting complexity to solvers.
-40%
Extraction Reduction
Atomic
Cross-Chain Settle
03
The Payer: End Users & Apps
The fragmentation bill is paid via higher gas costs and slippage. DApps on Base subsidize users, while Arbitrum sequencer revenue is cannibalized.\n- Hidden Tax: MEV is a regressive tax on all transactions.\n- Developer Burden: Teams must build bespoke protection on each L2.
$50M+
Annual User Cost
2-3%
Avg. Slippage Impact
04
The Entity: SUAVE by Flashbots
A dedicated blockchain for MEV aiming to decentralize and democratize extraction. It acts as a cross-chain mempool and solver network, competing directly with private silos.\n- Marketplace for Privacy: Encrypted order flow auctions.\n- Modular Design: Separates expression, execution, and settlement.
Universal
Mempool
Encrypted
Order Flow
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