Why Relay Auctions Are Not a Silver Bullet

Relay auctions are not trustless. They shift trust from a single sequencer to a decentralized set of relay bidders, but the winning relay still holds temporary, centralized power over transaction ordering and inclusion, creating a time-bound trust assumption for each bundle.

The economic model is fragile. Protocols like Across and SUAVE rely on competitive bidding to minimize costs, but this creates a race to the bottom where the lowest-cost relay may be the most economically vulnerable to manipulation or bribery.

They expose new MEV vectors. A malicious relay can execute time-bandit attacks by reordering transactions within their won bundle, or engage in bid censorship to block specific transactions, problems that naive auction designs do not mitigate.

Evidence: The Ethereum PBS (proposer-builder separation) model shows that even with auctions, dominant builders like Flashbots can emerge, centralizing the relay layer and creating systemic risk if compromised.

Relay auctions prioritize extractable value. The winning relay in a system like Across or Stargate is the one that bids the highest for the right to process a user's cross-chain transaction. This creates a direct incentive to maximize the arbitrage or MEV potential of that transaction, not to ensure its finality or security.

User and relay incentives diverge. A user wants a fast, cheap, and secure transfer. A relay's profit is the difference between its winning bid and the value it extracts. This misalignment leads to systemic risks like latency attacks, where relays delay transactions to capture more value, directly harming the user.

Auction revenue does not secure the system. The fees paid by users in an auction model flow to relay operators, not to the underlying protocol or its security providers. This creates a fee leakage problem where the value securing the network (e.g., staked assets) is disconnected from the revenue generated by its use.

Evidence: In intent-based systems like UniswapX and CowSwap, the auction for order flow creates a known problem of searcher centralization, where a few sophisticated actors dominate. This same dynamic emerges in relay networks, concentrating power and creating single points of failure.

Relay auctions optimize for cost, not security. The winning relay in systems like Across or Succinct is the cheapest bidder, not the most reliable operator. This creates a perverse incentive to cut corners on infrastructure and data sourcing to win.

This leads to centralization pressure. The lowest-cost operator wins most auctions, creating a single point of failure. This contradicts the decentralized security model that Ethereum rollups and Cosmos zones were designed to achieve.

The result is brittle liveness. A financially stressed, low-margin relay has no capital buffer. Network downtime or censorship during volatile periods becomes a predictable outcome, not a black swan event.

Evidence: In Succinct's early auctions, a single relay won over 60% of bids by undercutting competitors, demonstrating the rapid centralization inherent to pure cost-minimization.

Relay auctions are not Sybil-proof. They replace identity verification with economic staking, which creates a new attack vector. A malicious actor can stake capital to win auctions and censor or delay transactions, forcing the protocol to slash their stake as a penalty.

The cost of attack is the slashing penalty. This creates a simple economic game. If the profit from an attack (e.g., MEV extraction, trade front-running) exceeds the slashing cost, the attack is rational. Protocols like Across and Succinct must calibrate penalties to outprice potential attack revenue.

This is a subsidy problem. Honest relays profit from fees, while malicious relays profit from attack revenue minus slashing. The system's security depends on ensuring the latter is always negative, which requires perfect and timely penalty enforcement—a non-trivial coordination challenge.

Evidence: In early 2023, a proposed MEV attack on a major intent system was priced at ~$200k profit. The required staking to win relays was ~$50k. Without a slashing penalty exceeding $200k, the attack was viable, demonstrating the critical calibration failure.

Auctions optimize for cost, not security. The winning relay in a system like Across or Succinct is the cheapest bidder, creating a race-to-the-bottom that pressures operational security margins and centralizes risk.

Latency is the hidden adversary. Auction rounds add critical milliseconds, making them unsuitable for high-frequency DeFi or gaming transactions where UniswapX intents require sub-second finality.

The endpoint security fallacy persists. An auction secures the data transport layer, but the attestation logic and destination contract remain single points of failure, as seen in early LayerZero configurations.

Evidence: The Ethereum PBS (proposer-builder separation) model shows that pure auctions require complex mitigations like MEV-boost to prevent centralization, a lesson cross-chain protocols must learn.