Will ERC-4337 Unify or Fragment MEV?

ERC-4337 redefines the MEV supply chain. The standard introduces a new transaction flow where UserOperations are bundled and submitted by Bundlers, creating a centralized point for value capture previously held by block producers.

The protocol fragments the validator role. It separates transaction ordering (Bundlers) from block inclusion (Validators), which decentralizes the MEV surface but risks creating competing extractor economies between these new actors and existing searcher-builder networks.

This creates a unification paradox. While ERC-4337 standardizes account abstraction, its economic design incentivizes Bundler consolidation, potentially leading to a few dominant players like Ethereum's Flashbots or Coinbase's Base bundler service controlling the flow.

Evidence: The mempool for UserOperations is permissionless, but dominant Bundlers with superior infrastructure and stake in Pimlico, Alchemy, or Stackup will capture the majority of profitable bundles, mirroring the builder centralization seen in PBS.

ERC-4337 fragments MEV extraction. The standard shifts transaction ordering power from the public mempool to private bundler networks. This creates new, opaque markets where searchers and builders compete for user operations, splintering the monolithic block builder role seen in PBS.

This fragmentation unifies user experience. By abstracting gas and signature complexity into a standardized UserOperation, ERC-4337 creates a single, predictable interface. Wallets like Safe and Coinbase Smart Wallet build atop this, hiding the underlying MEV competition from end-users.

The contradiction is intentional. The system's security relies on permissionless bundlers competing on fees, which requires profitable MEV. Unification at the application layer is funded by fragmentation at the infrastructure layer. Protocols like Etherspot and Alchemy's Rundler are early bundler implementations proving this model.

Evidence: The proliferation of Paymaster services from Pimlico and Biconomy demonstrates the economic reality. These entities subsidize gas for users, capturing value and MEV opportunities in return, directly enabled by the 4337 architecture.

Bundlers are the new block builders. They execute the mempool for UserOperations, deciding transaction ordering and inclusion. This creates a parallel MEV supply chain separate from Ethereum's block builders, introducing competition for extractable value.

Paymasters are the new rent-seekers. By sponsoring gas fees, they act as financial gatekeepers. This role enables sponsored transaction censorship and creates a market for fee abstraction, similar to MetaMask's Snaps or Circle's Gas Station.

Fragmentation precedes unification. Initial competition among bundlers like Stackup and Alchemy will create regionalized MEV pools. Long-term, economic gravity favors aggregation, leading to super-bundlers that mirror Flashbots' dominance in traditional MEV.

Evidence: The mempool for UserOperations is permissionless. Any bundler can front-run a pending intent, proving the inherent MEV vulnerability in ERC-4337's current specification.

ERC-4337 fragments MEV. The standard creates a new transaction class (UserOperations) processed by a parallel mempool. This segregates intent-based flow from vanilla transactions, creating distinct searcher and bundler markets.

Bundlers become the new validators. They are the sole entities that can submit UserOperations to the base layer. This centralizes transaction ordering power, creating a permissioned MEV extraction point distinct from PBS builders.

Account abstraction enables private order flow. Smart accounts can sign orders directly to services like UniswapX or CoW Swap. This bypasses public mempools entirely, further fragmenting MEV away from Ethereum's core auction.

Evidence: The proliferation of RPC endpoints like Alchemy's eth_sendRawTransactionConditional already shows the demand for specialized, conditional transaction channels that ERC-4337 will formalize and expand.