The Future of Consensus is MEV-Aware

Traditional blockchains treat transaction ordering as a neutral, first-come-first-served process. This creates a multi-billion dollar blind spot where validators outsource ordering to the highest bidder, capturing value that should belong to users or the protocol.\n- Value Leakage: ~$1B+ in MEV extracted annually from Ethereum alone.\n- User Harm: Front-running and sandwich attacks degrade UX and increase costs.\n- Centralization Pressure: MEV profits incentivize validator cartels and stake pooling.

Protocols can internalize MEV by running a sealed-bid auction for block space at the consensus layer. Validators are compensated directly for optimal ordering, eliminating the opaque, off-chain market.\n- Value Recapture: MEV revenue flows back to protocol stakers, not third parties.\n- Fairer Ordering: Auction mechanics like time boosts or threshold encryption reduce harmful MEV.\n- Composability: Creates a native, programmable marketplace for block building.

Ethereum's PBS roadmap and L2s like Arbitrum and Fuel architecturally separate the roles of block proposing and building. This creates a competitive builder market that commoditizes block production and makes censorship resistance enforceable.\n- Decentralization: Prevents a single entity from controlling both selection and ordering.\n- Specialization: Builders compete on inclusion, not just stake weight.\n- Censorship Resistance: Provers can force inclusion of transactions via crLists.

Protocols like Eclipse and Penumbra use cryptographic techniques to hide transaction content until the moment of execution. This neutralizes front-running by making the mempool opaque to searchers.\n- Strong Privacy: Transaction details remain hidden until block inclusion.\n- MEV Resistance: Eliminates the information asymmetry that enables predatory strategies.\n- Throughput Preservation: Decryption happens in parallel at the validator set, not sequentially.

Rollups that simply batch transactions to a base chain export their MEV problems upstream. Sequencers become centralized profit centers, and cross-domain arbitrage between L2s creates new, complex MEV vectors that users cannot hedge.\n- Sequencer Rent: Single sequencer models capture all intra-block MEV.\n- Cross-Chain Arb: Creates latency-based MEV between Optimism, Arbitrum, and Base.\n- Fragmented Liquidity: MEV strategies must now operate across multiple state zones.

Shifts the paradigm from specifying transactions to declaring desired outcomes. Users submit signed intents, and a decentralized network of solvers competes to fulfill them optimally, abstracting away complexity and MEV.\n- UX Abstraction: Users get best execution without managing gas or slippage.\n- Efficiency: Solvers internalize cross-domain MEV as part of the solution, benefiting users.\n- Composable Flow: Native integration with CowSwap, Across, and UniswapX.

Traditional PoS treats block production as a neutral task, but validators are rational. The ~$1B+ annualized MEV creates a centralizing force, as large stakers can afford sophisticated extraction tooling. This leads to stake concentration and potential long-range attacks, where the economic incentive to reorg a chain outweighs slashing penalties.

• Centralization Pressure: Top-tier validators capture outsized MEV rewards.
• Security Degradation: The honest majority assumption breaks when dishonesty is more profitable.
• Liveness Risks: Validators may delay blocks to capture arbitrage, increasing latency.

Proposer-Builder Separation (PBS), as pioneered by Ethereum's roadmap and Flashbots SUAVE, externalizes block building. Builders compete in a sealed-bid auction for block space, capturing MEV, while proposers simply select the highest-paying header. This separates trust, preventing validators from frontrunning their own blocks. Encrypted mempools like Shutter Network take this further by hiding transaction content until inclusion.

• Decentralizes Power: Separates block production from transaction ordering.
• Reduces Censorship: Proposers see only payment, not tx details.
• Improves UX: Users face less frontrunning and sandwich attacks.

Rollups like Arbitrum and Optimism outsource security to L1 but run independent, opaque sequencers. This creates fragmented MEV pools where sequencers can extract value with zero visibility or accountability to the base layer. The result is hidden, uncompetitive extraction that harms users and creates a new central point of failure—the sequencer—without the slashing guarantees of L1 staking.

• Opaque Extraction: Users cannot audit sequencer behavior.
• Centralized Sequencers: Single points of control and failure.
• Inefficient Markets: MEV isn't competed away in a public market.

A shared sequencer set, like those proposed by Espresso Systems or Astria, processes transactions for multiple rollups. This creates a unified, competitive marketplace for cross-rollup MEV. Protocols can implement verifiable, fair ordering rules (e.g., first-come-first-served) or run transparent auctions for block space, returning a portion of MEV revenue back to the rollup's treasury or token holders.

• Market Efficiency: Cross-rollup MEV is captured and redistributed.
• Enhanced Security: Decentralized sequencer sets with slashing.
• Revenue Recapture: MEV becomes a protocol-owned revenue stream.

Paradigms like UniswapX and CowSwap solve for UX by letting users submit intents (desired outcome) rather than transactions (specific execution path). This shifts complexity and risk to solvers, but creates a new solver monopoly risk. The most sophisticated solver with the best liquidity access and MEV extraction capabilities will dominate, potentially leading to centralization and new forms of value extraction hidden within the solving process.

• Solver Centralization: A few players control all order flow.
• Opaque Execution: Users cannot verify they received the best price.
• Regulatory Risk: Solvers may be classified as brokers or dealers.

The antidote is a permissionless solver network with enforceable, verifiable execution. Protocols must design incentive-compatible mechanisms where solvers compete in open auctions, and their proposed solutions are cryptographically verifiable for optimality. This mirrors PBS at the application layer. Across Protocol's optimistic bridging and CowSwap's batch auctions with uniform clearing prices are early examples of credibly neutral, verifiable execution.

• Permissionless Participation: Any actor can become a solver.
• Cryptographic Proofs: Execution optimality can be verified or disputed.
• Fair Distribution: MEV profits are competed away to the user.