Private mempools are opaque by design. They hide transaction flow from the public mempool, preventing frontrunning but also blinding users to the true market price. This creates a principal-agent problem where the searcher or validator becomes the sole source of truth.
history-of-money-and-the-crypto-thesis
Blog
Why Money Needs a Public Mempool
A public transaction queue is not a bug but a feature of sound money. We dissect why opaque, private order flow is a greater threat to financial sovereignty than transparent MEV extraction.
introduction
THE TRANSPARENCY PARADOX
Introduction: The Flaw in the Private Vault
Private mempools create a false sense of security by obscuring the very market data required for fair execution.
Transparency is a non-negotiable property of money. Public ledgers like Bitcoin and Ethereum derive trust from verifiable state transitions. A private transaction channel breaks this axiom, forcing users to trust a third party's execution instead of the network's consensus.
The flaw is informational asymmetry. Protocols like Flashbots SUAVE or CoW Swap solve for MEV but maintain a commitment to eventual public settlement. A purely private system lacks the competitive pressure of a public order flow auction, guaranteeing suboptimal prices.
Evidence: Ethereum's public mempool processes over 1.5 million transactions daily, creating a liquid price-discovery layer. Private systems fragment this liquidity, a regression to the inefficient, trust-based OTC desks of traditional finance.
key-trends
WHY MONEY NEEDS A PUBLIC MEMPOOL
The Three Pillars of Public Settlement
Private order flow extracts value and creates systemic risk. A public mempool is the non-negotiable foundation for a fair, efficient, and secure financial system.
01
The Problem: Extractable Value and Front-Running
Private mempools (e.g., Flashbots SUAVE, Jito) centralize order flow, enabling MEV extraction and front-running at user expense. This creates a tax on every transaction, estimated at $500M+ annually on Ethereum alone.\n- Value Leakage: Users pay more for swaps and liquidations.\n- Centralization Risk: Relayers become critical, trusted intermediaries.\n- Opaque Pricing: True market price discovery is impossible.
$500M+
Annual Extract
>60%
OF in Private Pools
02
The Solution: Credibly Neutral Settlement
A public, permissionless mempool ensures transaction ordering is a public good, not a private revenue stream. This is the core innovation of blockchains like Bitcoin and Ethereum's base layer.\n- Fair Access: Any validator can propose blocks from the same data set.\n- Auditable Ordering: MEV is transparent and can be mitigated with protocols like CowSwap and MEV-Share.\n- Level Playing Field: Prevents the formation of permanent, privileged access lanes.
0
Preferred Relayers
100%
Tx Visibility
03
The Enforcer: Censorship Resistance
A public mempool is the primary technical mechanism for censorship-resistant finance. Private order flow is inherently censorable, as seen with OFAC-compliant blocks from entities like Flashbots.\n- Sovereign Guarantee: No single entity can prevent a valid transaction.\n- Protocol Integrity: Upholds the foundational promise of decentralized networks.\n- Anti-Fragility: Financial systems must withstand political pressure, not facilitate it.
>50%
OFAC Blocks (2023)
1
Required Trust
deep-dive
THE MARKETPLACE
The Mempool as a Public Good: Transparency vs. Opacity
The public mempool is the foundational price-discovery mechanism for block space, and its absence creates systemic risk.
A public mempool is a price-discovery engine. It aggregates global demand, allowing users and builders like Flashbots and BloXroute to compete on transparent fee markets. Without it, block space pricing becomes a black box controlled by a few.
Private order flow destroys market efficiency. Protocols like Uniswap and 1inch rely on public mempool data for MEV protection and optimal routing. Opaque, off-chain channels to validators create information asymmetry that harms end-users.
Opacity enables systemic front-running. The shift to private transaction pools, or 'dark forests', moves risk from the public chain to private venues. This centralizes power with a few block builders and sequencers, undermining the credible neutrality of the base layer.
Evidence: Ethereum's transition to Proposer-Builder Separation (PBS) explicitly designed the crList mechanism to preserve a public bidding channel, acknowledging that a fully private market is a security failure.
MEMPOOL ARCHITECTURE
Public vs. Private Transaction Lifecycle: A Comparative Breakdown
A comparison of transaction submission pathways, from user signing to block inclusion, highlighting the trade-offs in censorship resistance, MEV, and finality.
| Feature / Metric | Public Mempool (Vanilla) | Private Relay (e.g., Flashbots Protect, bloXroute) | Direct-to-Builder (e.g., EigenLayer, Shutter) |
|---|---|---|---|
Transaction Visibility Post-Signing | Public to all nodes & searchers | Private to relay operator only | Private to trusted builder or encrypting sequencer |
Frontrunning / Sandwich Attack Surface | High (100% exposure) | Low (< 5% exposure via relay leak) | Theoretically Zero (with TEE/encryption) |
Censorship Resistance Guarantee | High (any validator can include) | Low (relay operator controls flow) | Variable (depends on builder decentralization) |
Inclusion Guarantee (Base Fee > Tip) | Probabilistic, time-based | High (>95% for 5-block window) | Contractual (via PBS or slashing) |
Time to Finality (Eth L1, non-reorg) | ~12 minutes (avg. 6 blocks) | ~12 minutes (same chain finality) | ~12 minutes (same chain finality) |
Typical Cost Premium | 0% (base + public tip) | 10-50% of tip value | Fixed fee or tip auction (5-20%) |
Primary Use Case | General UX, non-urgent swaps | MEV protection for large trades | Institutional order flow, voting, airdrop claims |
Relies on Trusted Third Party |
counter-argument
THE PUBLIC LEDGER IMPERATIVE
Steelman: "But MEV is Theft, Privacy is Safety"
A public mempool is not a bug but the foundational security feature that makes decentralized money possible.
A public mempool is auditability. Permissionless verification requires seeing pending transactions. Private order flow to services like Flashbots Protect or BloXroute centralizes information, creating a privileged class of validators. This opaque layer becomes the new attack surface.
MEV is not theft, it's arbitrage. It is the inevitable price discovery of a global settlement layer. Protocols like CowSwap and UniswapX formalize this via intents, making the competition explicit and composable rather than hidden.
Privacy without transparency is fraud. Complete anonymity breaks the triple-entry accounting that defines blockchain. Zero-knowledge proofs in zk-rollups or Aztec provide selective privacy while maintaining public state verification, which is the correct architectural trade-off.
Evidence: The 2022 OFAC sanctions on Tornado Cash demonstrated that opaque privacy tools fail under regulatory scrutiny, while transparent base-layer protocols like Bitcoin and Ethereum persist. Obfuscation creates a bigger target.
takeaways
WHY MONEY NEEDS A PUBLIC MEMPOOL
Takeaways: The Non-Negotiables for Protocol Architects
A private mempool is a temporary convenience that creates permanent systemic risk. Here's what you must architect for.
01
The Problem: MEV as a Systemic Tax
Private order flow (PFOF) centralizes extractive value, creating a hidden tax on all users. Without a public mempool, you censor the market's price discovery mechanism.
- Result: Users lose ~5-20% of swap value to generalized frontrunning.
- Consequence: Protocols like Uniswap and Aave see distorted, inefficient pricing.
5-20%
Value Extracted
0
Price Discovery
02
The Solution: Commit-Reveal & Threshold Encryption
You can have privacy and fairness. Encrypt transactions in the mempool and reveal them only at execution time.
- Mechanism: Use schemes like Shutter Network's threshold encryption.
- Benefit: Neutralizes frontrunning while preserving the public, permissionless broadcast layer.
~500ms
Reveal Latency
100%
Fair Ordering
03
The Mandate: Censorship Resistance is Binary
If validators can selectively exclude transactions from the public view, the network has failed. This is a first-principles requirement for credible neutrality.
- Failure Mode: Flashbots Protect-style private relays create a centralized choke point.
- Architectural Imperative: Design for proposer-builder separation (PBS) with forced inclusion.
1
Choke Point
0
Tolerance
04
The Blueprint: SUAVE as a Canonical Example
Flashbots' SUAVE demonstrates the endgame: a dedicated, decentralized mempool and block-building network. It separates expression (mempool) from execution (block building).
- Key Insight: Creates a competitive marketplace for block space, commoditizing builders.
- Outcome: Redirects MEV value from extractors back to users and validators.
Decentralized
Mempool
Commoditized
Builders
05
The Reality: Intent-Based Architectures Win
Users express goals, not transactions. Protocols like UniswapX, CowSwap, and Across abstract the mempool, outsourcing routing and execution to a solver network.
- User Benefit: Guaranteed execution at best price, no gas management.
- System Benefit: Solver competition in a public arena minimizes extracted MEV.
Best Price
Execution
~0
User Slippage
06
The Verdict: L2s Must Inherit, Not Innovate
Rollups that implement private mempools or centralized sequencers are building a regulatory and technical time bomb. The base layer's security model is non-negotiable.
- Precedent: Ethereum's credibly neutral mempool is the asset.
- Architect's Duty: Ensure L2 state transitions are force-included on L1, always.
L1
Settlement
Force Include
Mechanism
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