Statelessness and sharding dissolve the single-node execution model, the foundation of today's MEV extraction. Validators no longer process full state, fragmenting the traditional searcher-builder-validator pipeline.
the-ethereum-roadmap-merge-surge-verge
Blog
The Future of MEV in a Stateless, Sharded Chain
Analyzing how Ethereum's Surge and Verge upgrades (Danksharding, PBS, statelessness) will institutionalize MEV, turning opaque extraction into a transparent, auction-based commodity that defines validator profitability.
introduction
THE END OF THE MONOLITH
Introduction
Statelessness and sharding dismantle the monolithic validator, forcing a fundamental re-architecture of MEV supply chains.
MEV becomes a coordination game across shards and state providers. This shifts power from monolithic block builders to cross-domain schedulers and intent-solvers like UniswapX or Across, which must now orchestrate execution across fragmented liquidity.
The new bottleneck is state access, not block space. Systems that efficiently bundle state proofs and execution, like those being researched for Ethereum's Verkle trees, will control the flow of arbitrage and liquidation opportunities.
Evidence: Ethereum's roadmap explicitly targets stateless clients and Danksharding, a design that makes the current Flashbots SUAVE model for centralized block building architecturally impossible.
key-trends
FROM FRAGMENTATION TO ORCHESTRATION
Executive Summary: The Three Pillars of Institutional MEV
The shift to stateless, sharded chains like Ethereum's Danksharding and Celestia's modular data layer will fragment liquidity and state, demanding a new MEV architecture.
01
The Problem: State Fragmentation Kills Atomic Arbitrage
Cross-shard arbitrage on a Danksharding-like chain is impossible without a global state. Latency between shards creates non-atomic execution windows, turning today's simple arb into a multi-step, high-risk coordination problem.
- Risk: ~500ms+ shard latency creates frontrunning and execution failure risk.
- Impact: $10B+ in annual cross-domain MEV becomes inaccessible to simple searchers.
500ms+
Shard Latency
$10B+
MEV At Risk
02
The Solution: Intent-Based Coordination Layers (UniswapX, Across)
Searchers will shift from submitting complex transactions to declaring desired outcomes (intents). Specialized solvers compete across shards to fulfill these intents, internalizing cross-domain risk.
- Efficiency: Solvers optimize for global state across shards, not local execution.
- Access: Democratizes complex MEV, moving advantage from latency to algorithmic prowess.
10x
Wider Arb Nets
-70%
User Slippage
03
The Enforcer: Programmable Preconfirmations (Espresso, SUAVE)
In a stateless world, block builders lose monopoly power. Preconf markets allow users to auction future transaction inclusion rights, creating a liquid market for block space across shards.
- Control: Institutions can guarantee execution and price across fragmented domains.
- Revenue: Shifts MEV from pure extraction to a fee market service with SLAs.
100ms
Execution SLA
~$1B
Market Size '25
04
The New Searcher: MEV Hedge Funds (GSR, Keyrock)
Institutional capital will dominate. The required scale for cross-shard MEV—managing risk, running solvers, and bidding in preconf auctions—creates a moat too wide for retail.
- Capital: Requires $100M+ balance sheets to hedge cross-shard execution risk.
- Tooling: Vertical integration from RPC (Alchemy) to solver (CowSwap) to execution (Flashbots).
$100M+
Min. Capital
90%
Market Share
05
The Infrastructure: Universal Settlement Layers (EigenLayer, Avail)
Shared security and data availability layers become the coordination plane. They enable verifiable bridging of state and intent proofs, making cross-shard MEV settlements trust-minimized.
- Security: Re-staked ETH secures cross-domain messaging for MEV bundles.
- Composability: Unlocks new MEV forms like inter-rollup liquidations.
$15B+
TVL Securing It
~0
Trust Assumptions
06
The Endgame: MEV as a Regulated Market Maker
The most valuable MEV will be providing deterministic, priced liquidity across thousands of shards—a function indistinguishable from traditional market making. This attracts regulatory scrutiny and institutional productization.
- Shift: From 'dark forest' extraction to CFTC-regulated liquidity provisioning.
- Outcome: MEV revenue becomes a predictable yield stream, securitized and traded.
24/7
Liquidity Duty
Basis Points
Revenue Model
market-context
THE PROBLEM
The MEV Status Quo: An Opaque, Centralizing Force
Current MEV extraction concentrates power, undermines decentralization, and creates systemic risk.
Searcher-Builder-Proposer separation centralizes block production. Specialized builders like Flashbots' SUAVE and bloXroute aggregate transactions, creating a cartel that controls block ordering and censors transactions.
Cross-domain MEV amplifies these risks. Arbitrage between Uniswap on Ethereum and Aave on Arbitrum requires centralized relays, turning protocols like Across and LayerZero into critical failure points for the entire ecosystem.
Stateless verification breaks the model. Sharded chains with stateless clients cannot process the massive private transaction bundles that define today's MEV, forcing a fundamental architectural redesign of the extractive pipeline.
deep-dive
THE ARCHITECTURAL SHIFT
The Engine of Change: Danksharding, PBS, and Statelessness
Ethereum's core roadmap redefines MEV extraction by decoupling block building from proposing and eliminating global state.
Proposer-Builder Separation (PBS) formalizes MEV markets. Builders like Flashbots SUAVE compete to create optimal blocks, paying proposers for the right to include them. This creates a transparent, auction-based system for block space, moving MEV from a dark forest to a public marketplace.
Stateless clients and Verkle trees eliminate the need for nodes to store global state. This reduces hardware requirements, enabling more decentralized participation. For MEV, it means searcher strategies must operate with cryptographic proofs of state, not local copies, changing the latency and data-access game.
Danksharding's data availability layer separates data publication from execution. Rollups like Arbitrum and Optimism post cheap data blobs, while L1 validators guarantee its availability. This massively scales data throughput without increasing execution load, creating new MEV opportunities in cross-rollup arbitrage and data ordering.
The combined effect is a modular MEV supply chain. Specialized actors handle building, proposing, and data provisioning. This specialization increases efficiency but risks centralization among sophisticated builders, a trade-off the ecosystem must manage through credible neutrality and protocol design.
THE SHARDED FUTURE
MEV Economics: From Chaos to Commodity
Comparative analysis of MEV extraction and mitigation strategies in a stateless, sharded blockchain paradigm.
| Core Mechanism | Current State (Monolithic L1) | Sharded Execution (e.g., Danksharding) | Stateless Future w/ PBS |
|---|---|---|---|
Primary MEV Vector | Sequencer/Proposer Centralization | Cross-Shard Arbitrage | Builder-Proposer Collusion |
Extraction Latency Window | 12-15 seconds | < 1 second per shard | Deterministic via auction |
Searcher Overhead | Gas bidding wars | Multi-shard coordination | Pure algorithm optimization |
Proposer Revenue Source | Priority Gas Fees + Coinbase | Cross-shard bundle tips | Block bid from Builder |
MEV Redistribution | Proposer capture >95% | Proposer & Cross-shard Searchers | Proposer, Builder, Searcher (via PBS) |
State Access Bottleneck | Global state contention | Shard-local state | Witness-based validation (no state) |
Frontrunning Mitigation | Fair Sequencing Services | Encrypted Mempools per shard | Pre-confirmation & SUAVE-like intents |
Annual Extractable Value (Est.) | $1.2B (Ethereum 2023) | Scalable with shard count | Commodified via efficient markets |
counter-argument
THE ARCHITECTURAL SHIFT
The Centralization Counter-Argument: Will Builders Become the New Miners?
Statelessness and sharding shift computational burden to specialized builders, creating a new centralization vector.
Stateless clients require state providers. A stateless Ethereum client verifies blocks without holding the full state, relying on builders to supply cryptographic proofs. This creates a professional builder class with the capital and expertise to manage state data at scale.
Sharding amplifies builder advantage. With 64 data shards, the builder's job becomes assembling a global block from disparate data streams. This is a complex coordination problem that favors large, integrated entities over decentralized solo operators.
The builder role centralizes. This mirrors the centralization of Bitcoin mining into pools. Protocols like EigenLayer and SUAVE attempt to decentralize this function, but the economic logic of specialization and scale is powerful.
Evidence: Flashbots' dominance in post-merge Ethereum, controlling ~80% of MEV block production, demonstrates how specialization leads to market concentration in a two-tier system.
risk-analysis
FUTURE OF MEV
The New Risk Landscape
Statelessness and sharding dismantle the monolithic mempool, forcing MEV extraction into new, more complex forms.
01
The Problem: The Disappearing Mempool
Stateless clients and Danksharding's data-availability sampling destroy the concept of a global, inspectable transaction pool. Seers and bots lose their primary hunting ground, as transactions are only visible upon inclusion in a shard block. This forces a fundamental architectural shift in MEV supply chains.
~0s
Mempool Life
64+
Shard Targets
02
The Solution: Proposer-Builder Separation (PBS) as Non-Optional Infrastructure
With no mempool to snipe, value capture consolidates at the block production layer. PBS becomes the mandatory, protocol-enforced market for block space. Builders compete in sealed-bid auctions, turning MEV into a formalized, efficient revenue stream for validators but centralizing technical power in a few sophisticated builder entities like Flashbots SUAVE.
>99%
Dominance
$1B+
Annual Revenue
03
The Problem: Cross-Shard MEV Arbitrage Hell
Atomic arbitrage across 64+ shards is impossible without new coordination primitives. A profitable opportunity on Shard A and Shard B cannot be executed simultaneously, creating fragmented liquidity and unrealized arbitrage. This introduces new risks of partial execution and failed cross-shard bundles, degrading capital efficiency for DeFi protocols like Uniswap and Aave.
12s+
Slot Time
High Risk
Partial Fill
04
The Solution: Intent-Based Coordination & Shared Sequencing
The future is declarative, not transactional. Users submit intents (e.g., "swap X for Y at best price") to specialized solvers like those in UniswapX or CowSwap. These solvers, potentially operating as shared sequencers for rollup stacks (e.g., Espresso, Astria), internalize cross-shard complexity, guaranteeing execution or reverting atomically. MEV is competed away at the solver layer.
~500ms
Solver Latency
-90%
User Gas
05
The Problem: Validator Centralization via MEV Cartels
PBS economics favor builders with the best data, algorithms, and exclusive order flow (EOF) deals. This creates a feedback loop: top builders win more auctions, earn more MEV, and can outbid others for validator blockspace, potentially forming cartels. The protocol's security becomes dependent on the economic honesty of a few centralized builder entities.
<10
Major Builders
>60%
Market Share
06
The Solution: Enshrined PBS & Distributed Validator Technology (DVT)
The endgame is protocol-mandated PBS to eliminate builder trust, combined with DVT (e.g., Obol, SSV) to decentralize the validator side. The protocol itself runs the auction, and validator duties are split across clusters, making it economically irrational for a cartel to form. This aligns with Ethereum's credible neutrality and turns MEV into a public good.
Protocol
Level PBS
1000+
DVT Nodes
future-outlook
THE ARCHITECTURE
The 2025 Validator Stack: MEV as a Service
Statelessness and sharding transform MEV extraction from a solo sport into a distributed, protocol-managed service layer.
Statelessness flips the MEV model. Validators no longer execute transactions locally, receiving state proofs from builders. This separates block proposal from execution, formalizing the PBS (Proposer-Builder Separation) model seen in Ethereum's mev-boost.
Sharding fragments the opportunity surface. MEV becomes a multi-domain game across 64 data shards. Aggregators like Flashbots' SUAVE will coordinate cross-shard arbitrage, requiring new intent-based routing protocols.
The validator is a service orchestrator. Their primary role shifts to attesting to the validity of outsourced execution. Revenue derives from selling block space to specialized MEV-as-a-Service (MaaS) providers like Jito Labs.
Evidence: Ethereum's Dencun upgrade reduced blob costs by 99%, proving the economic viability of outsourcing data availability—a prerequisite for stateless, sharded MEV markets.
takeaways
THE NEW MEV LANDSCAPE
TL;DR: What This Means for Builders and Investors
Statelessness and sharding dismantle the monolithic block, forcing a fundamental re-architecture of MEV extraction and distribution.
01
The Problem: Cross-Shard MEV is a Coordination Nightmare
Atomic arbitrage across 64+ shards is impossible with current PBS. The winning strategy fragments, creating a multi-round coordination game for searchers and builders.\n- Latency Explosion: ~500ms cross-shard finality kills front-running but also complicates atomic bundles.\n- Builder Dominance: Only large, well-capitalized builders can coordinate complex cross-shard bundles, centralizing power.
64+
Shards
~500ms
Finality Lag
02
The Solution: Intent-Based Architectures Win
Stateless clients can't verify complex execution. The winning primitive becomes declarative intents fulfilled by a competitive solver network, as pioneered by UniswapX and CowSwap.\n- User Sovereignty: Users express desired outcomes (e.g., 'best price for 100 ETH'), not specific transactions.\n- Solver Competition: A permissionless network of solvers competes to fulfill intents efficiently, capturing MEV as a service fee.
100%
Execution Privacy
-99%
Revert Risk
03
The Problem: Proposer-Builder Separation (PBS) Hits a Wall
Stateless validators cannot verify large blocks or bundles. The current PBS model, where builders send full blocks, becomes prohibitively expensive due to witness size.\n- Bandwidth Crisis: Sending ~1 MB state witnesses per block per validator is unsustainable.\n- Builder Centralization Risk: Only entities with specialized infrastructure for witness compression/transmission can compete.
~1 MB
Witness Size
10 Gbps+
Req. Bandwidth
04
The Solution: Enshrined PBS and Distributed Builders
The protocol must formally separate block building from proposing. Expect an enshrined PBS design where builders commit to compact state diffs, not full blocks.\n- Protocol-Level Auctions: MEV payments are baked into consensus, reducing extractable surplus for centralized builders.\n- Specialized Shard Builders: Emergence of builders optimized for specific shards or application verticals.
~0
Trust Assumptions
L1 Native
MEV Redistribution
05
The Problem: MEV Searchers Become Solver Networks
The classic searcher model—running bots to find and bundle arbitrage—fails in a sharded world. Opportunities are smaller, faster, and require cross-domain liquidity.\n- Fragmented Liquidity: TVL is spread across shards, reducing per-shard opportunity size.\n- Infrastructure Overhead: Maintaining nodes and mempools for all shards is cost-prohibitive for small players.
-90%
Per-Shard Arb Size
$10M+
Operational Cost
06
The Solution: Vertical Integration and MEV-as-a-Service
Winning firms will vertically integrate solver networks, bridge liquidity, and builder software. Look for models like Across's bonded relayers or LayerZero's omnichain liquidity.\n- Capital Efficiency is King: Firms that can provide liquidity and execution across shards will capture the majority of cross-domain MEV.\n- Retail Access: MEV-as-a-Service products emerge, allowing users to participate in yield from intent solving.
$10B+
Cross-Shard TVL
New Asset Class
MEV Yield
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