Why EIP-4337's Mempool is a New Frontier for MEV

Today's MEV is dominated by a closed ecosystem of private mempools (e.g., Flashbots Protect) and exclusive orderflow auctions (OFAs). This centralizes value capture, limits competition, and creates a single point of failure for censorship resistance.

• ~90%+ of Ethereum MEV flows through private channels
• Searchers compete on relationships, not just algorithm efficiency
• User intent is opaque, limiting complex cross-domain execution

EIP-4337 creates a standardized public mempool for UserOperations. This exposes raw, structured user intent ("I want to swap X for Y at price Z") to a permissionless network of searchers and bundlers, mirroring the early days of Ethereum's tx pool but with richer semantics.

• Unlocks Intent-Based Arbitrage across DEXs like Uniswap and CowSwap
• Enables Novel Bundling (e.g., social recovery gas sponsorship)
• Creates a Liquid Market for bundler services, akin to block builders

A new actor emerges who doesn't just reorder transactions, but fulfills complex user intents for a fee. This shifts competition from pure latency wars to algorithmic sophistication in cross-domain execution (e.g., routing through LayerZero, Across, and native bridges).

• Revenue Source: Differential between user's limit price and execution cost
• Key Stack: Requires advanced solvers like those in UniswapX or CowSwap
• Scale: Potential to capture $1B+ annually from abstracted wallet flows

Bundlers are the block producers of the AA ecosystem. They compete in a priority gas auction (PGA) for UserOperations, creating a direct MEV revenue stream. Their role converges with that of SUAVE-like block builders, but for the UserOperation mempool.

• Revenue: PGA bids + bundler subsidies from dapps
• Risk: Must handle simulation and reputation at scale
• Scale: Thousands of bundlers expected, vs. handful of dominant builders

A public intent mempool introduces new attack vectors. Malicious UserOperations can spam or poison the pool, while bundlers can become centralized censors. The system's security depends on credibly neutral bundler rotation and robust p2p networking.

• Threat: Spam to DoS bundler simulation (~500ms per UserOp)
• Centralization Risk: Top 3 bundlers could control >60% of flow
• Mitigation: Requires staking, reputation, and slashing mechanisms

The ultimate shift is from transaction execution to intent fulfillment as the base layer primitive. This creates a programmable market for trust-minimized service provision, where networks like Chainlink's CCIP and Across could act as intent solvers. The wallet becomes the marketplace.

• Evolution: From "send tx" to "achieve outcome"
• Abstraction: Users define what, searchers compete on how
• Scale: Unlocks non-financial intents (e.g., governance, social)

The public UserOperation mempool exposes pending intents, enabling frontrunning and denial-of-service attacks. Malicious actors can spam the network with revert-only operations or gas price manipulation to censor or extract value from legitimate users.

• Key Risk: Intent-based transactions are more complex and vulnerable to pre-execution analysis.
• Impact: User experience degrades as transaction failure rates and latency increase.

Bundlers like Stackup, Alchemy, and Biconomy must operate private mempools or use MEV-boost style relays to protect UserOperations. This mirrors the evolution seen in Ethereum's block building ecosystem post-PBS.

• Key Benefit: Shifts risk from end-users to professional, capitalized bundlers.
• Benefit 2: Enables off-chain auction mechanisms for fair ordering, similar to CowSwap or UniswapX.

Bundlers bear capital risk for prefunding gas and operational risk for selecting profitable bundles. They become the primary target for time-bandit attacks and must manage complex simulation logic to avoid losses.

• Key Risk: A malicious UserOperation can drain a bundler's stake via a revert-with-gas loop.
• Mitigation: Requires robust reputation systems and stake slashing, akin to EigenLayer for restaking security.

Paymasters that sponsor gas become central MEV distribution hubs. They can extract value by bundling transactions and selling order flow, similar to Robinhood's payment for order flow model, but on-chain.

• Key Risk: Centralization pressure on who can afford to run a profitable paymaster service.
• Opportunity: Creates a new subsidy layer for dapps, abstracting gas costs entirely for users.

Traditional MEV searchers operate on atomic bundles. EIP-4337's UserOperations are non-atomic, breaking their models. This creates a new role: the Bundler, who aggregates UserOps into a single on-chain transaction.

• New Revenue Stream: Bundlers capture fees and can extract value from the ordering of UserOps.
• Fragmented Liquidity: Searchers must now compete across hundreds of independent Bundler mempools, not one public mempool.

UserOperations express user intent (e.g., "swap X for Y at a good price"), not explicit execution. This mirrors the shift seen in UniswapX and CowSwap.

• MEV Capture Shift: Value accrues to the party that best fulfills the intent, not just the fastest searcher.
• Privacy Boost: Intents can be fulfilled off-chain via solvers, reducing frontrunning surface. This is the Flashbots SUAVE vision, but native to account abstraction.

Ethereum's vision is a permissionless P2P mempool for UserOps. In practice, early dominance by Stackup, Alchemy, and Biconomy points to centralized aggregation.

• Relayer Risk: Centralized Bundlers become trusted order-flow gatekeepers, a single point of failure/censorship.
• Builder Opportunity: Decentralized Bundler networks (like Rated, EigenLayer AVS) are the next infra battle. Think Flashbots for EIP-4337.

Paymasters sponsor gas fees, enabling gasless UX. They pay for on-chain execution, making them the ultimate fee sink.

• Order Flow Auction: Paymasters can auction sponsored UserOp bundles to the highest-bidding Bundler, creating a formal OFA market.
• Subsidy Arbitrage: Protocols can subsidize specific actions (e.g., onboarding) and extract value via Paymaster-Bundler collusion or rebates.

A UserOperation can trigger actions on other chains via bridges like LayerZero or Across. The Bundler becomes a cross-chain orchestrator.

• Unified Liquidity: MEV can be extracted across the liquidity fragmentation of L2s by bundling cross-chain swaps.
• Complex Arbitrage: Atomic cross-chain arbitrage, previously near-impossible, becomes feasible via a single user signature.

For builders, the key is to instrument for this new landscape.

• Metrics: Track Bundler centralization (Gini coefficient), Paymaster adoption rates, and cross-chain UserOp volume.
• Integration Points: Build Bundler clients, solver networks for intent fulfillment, or Paymaster strategies that capture value from sponsored flows.