Who Bears the MEV Burden When Users Don't Pay Gas?

Users never pay zero. Gasless UX abstractions like ERC-4337 Account Abstraction or intent-based systems (UniswapX, CowSwap) shift the gas fee burden to third-party actors. These actors—bundlers, solvers, or relayers—front the transaction costs.

The subsidy creates a market. These actors must be compensated, so they monetize execution by extracting Maximum Extractable Value (MEV). The user's 'free' transaction is paid for via worse execution prices, captured arbitrage, or sandwich attacks.

The burden shifts, not disappears. The MEV burden moves from a transparent gas auction to opaque order flow auctions. Protocols like Flashbots SUAVE aim to democratize this, but the economic cost is now borne by all liquidity providers, not just the transacting user.

Evidence: In Q1 2024, intent-based DEX aggregators like 1inch and CowSwap processed billions in volume where users paid no gas, while solvers competed in backend auctions, capturing tens of millions in MEV to fund the subsidy.

Subsidy from LPs and Stakers: Users on gasless intent-based systems like UniswapX or CowSwap do not pay gas. The solvers who execute their transactions front the gas costs and profit by extracting MEV. This profit is a direct subsidy from the liquidity providers whose trades are sandwiched or arbitraged.

The Validator's Dilemma: In chains with proposer-builder separation (PBS), builders pay validators for block space via priority fees. Zero-gas user transactions reduce this fee pool, forcing validators to rely more on MEV bribes from builders to maintain revenue, centralizing block building power.

Evidence: On Arbitrum, over 30% of transaction volume is processed via private mempools or Flashbots Protect, indicating widespread MEV-aware routing that subsidizes user costs. This creates a regressive tax where sophisticated players profit at the expense of passive LPs.

Gasless UX creates a vacuum that builders must fill. If the user transaction pays zero fees, the only revenue for the block producer is the MEV they can extract from it. This makes MEV extraction a primary business model for entities like Jito Labs and bloXroute, not a side effect.

This is a direct subsidy from liquidity providers to end-users. Protocols like Arbitrum and Optimism use sequencer fees to subsidize gas, but builders recoup costs by frontrunning or sandwiching the very trades they enable. The cost is externalized onto LPs through worse execution prices.

The counter-argument is efficiency. Proponents argue this is the market pricing a hidden cost. Builders like Flashbots provide a necessary service of transaction ordering and liquidity aggregation that users implicitly demand. The alternative is a clogged, unpaid network.

Evidence: Jito's dominance on Solana. Over 90% of Solana blocks are built by Jito, funded almost entirely by MEV. This proves that in a high-throughput, low-fee environment, the builder role consolidates around maximal extractable value, not protocol fees.