The Economic Cost of MEV Leakage Between Rollups

Every cross-rollup price discrepancy is a tax on users, siphoned by bots. This is not just about sandwich attacks; it's a systemic liquidity fragmentation problem where value is extracted at the bridge.\n- Primary Vector: DEX arbitrage between L2s (e.g., Uniswap on Arbitrum vs. Optimism).\n- Economic Impact: Represents 30-50%+ of all cross-chain MEV value.\n- Result: Users get worse exchange rates, paying for the arbitrageur's profit.

Today's rollup sequencers are opaque, centralized MEV extraction points. They see all transactions before they're posted to L1, creating a single point of leakage.\n- The Flaw: Sequencer can front-run its own users' cross-chain intents.\n- Architectural Consequence: Forces reliance on trusted third-party bridges (like Across, LayerZero) to mitigate, which have their own extractive models.\n- Solution Path: Decentralized sequencer sets with commit-reveal schemes or shared sequencing layers like Espresso, Astria.

Solving leakage requires shifting from transaction-based to intent-based systems, where users specify what they want, not how to do it. This moves competition to the solver layer.\n- Key Entities: UniswapX, CowSwap, Anoma, SUAVE.\n- Mechanism: Solvers compete to fulfill the user's intent (e.g., "Swap X for Y on the best rollup") in a sealed-bid auction.\n- Outcome: MEV is internalized as solver competition, leading to better execution for the user, not extraction from them.

A neutral, cross-rollup block-building layer is the only scalable fix for inter-rollup MEV. It enables atomic execution across domains, turning leakage into efficient market clearing.\n- Core Function: Orders across multiple rollups are included in a single, atomic block.\n- Eliminates: The race condition between rollup sequencers that bots exploit.\n- Ecosystem Players: Espresso, Astria, and L1s like Ethereum with PBS (Proposer-Builder Separation) evolution.

MEV searchers exploit latency and information asymmetry between isolated rollup sequencers. This creates a multi-billion dollar arbitrage market where value leaks to a few centralized players instead of L2 users.

• Result: Up to 30-60 bps of swap value extracted per cross-L2 arbitrage opportunity.
• Impact: Degrades effective yields for LPs and increases slippage for end-users.
• Example: A profitable arb between Arbitrum and Optimism is pure economic leakage from both ecosystems.

Co-locating sequencers or using a shared sequencing layer like Espresso Systems or Astria enables atomic cross-rollup block building. This captures MEV at the protocol level for redistribution.

• Mechanism: Atomic inclusion prevents front-running between chains.
• Redistribution: Captured value can fund public goods or subsidize transaction fees.
• Parallel: UniswapX and CowSwap solve a similar problem on L1 with solver networks for intents.

Existing bridges like Across, LayerZero, and Circle's CCTP are MEV conduits. Their security-latency trade-offs directly determine the size of the arbitrage window and the cost of leakage.

• Fast & Centralized: Offers a ~1-5 min window for arbitrageurs.
• Slow & Secure: 7-day challenge periods (Optimistic bridges) eliminate real-time MEV but cripple composability.
• Result: Developers are forced to choose between economic security and user experience.

Next-generation rollups are baking MEV resistance into core protocol design. This includes encrypted mempools, fair ordering, and integrated PBS (Proposer-Builder Separation).

• Encrypted Mempools: Projects like Shutter Network prevent front-running by hiding transactions until block inclusion.
• Fair Ordering: Determines transaction order by time of receipt, not gas price.
• Outcome: Shifts advantage from off-chain searchers back to on-chain users and validators.