Best execution is unenforceable. The legal duty for brokers to seek optimal prices for clients is nullified by Maximum Extractable Value (MEV). Block producers, not traders, capture the economic surplus of transaction ordering.
mev-the-hidden-tax-of-crypto
Blog
The Future of 'Best Execution' in a MEV-Extracted World
An analysis of how maximal extractable value (MEV) has rendered traditional financial fiduciary duties meaningless, creating a fundamental conflict between builder profit and user best execution, and the emerging solutions attempting to bridge the gap.
introduction
THE BROKEN PROMISE
Introduction: The Fiduciary Fiction
Traditional finance's 'best execution' duty is a legal fiction in a world where block producers extract value from every transaction.
The fiduciary is the searcher. Entities like Flashbots and Jito Labs are the new intermediaries, building infrastructure to capture and redistribute MEV. Their profit motive directly conflicts with a user's execution quality.
The market is the counter-party. Protocols like UniswapX and CowSwap formalize this by outsourcing order flow to a competitive network of solvers. 'Best execution' becomes a batch auction won by the highest bidder, not a broker's duty.
Evidence: Over $1.2B in MEV was extracted from Ethereum and Solana in 2023, revenue that traditional finance would classify as a breach of fiduciary duty.
thesis-statement
THE OBSOLETE IDEAL
Core Thesis: Best Execution is a Pre-MEV Concept
Traditional 'best execution' is a regulatory fiction that ignores the structural reality of MEV extraction.
Best execution is a legacy concept defined by regulators for a world of centralized order books. It assumes a single, discoverable 'best price' exists. In decentralized finance, the settlement layer itself is the adversary, with searchers and builders competing to extract value between the user's intent and its on-chain inclusion.
The 'best' price is now probabilistic, not deterministic. A trade routed through UniswapX or CowSwap demonstrates this: the final execution price depends on a solver's ability to navigate MEV opportunities across venues like Curve or Balancer. The quoted price is an intent, not a guarantee.
Protocols that ignore MEV fail. Pre-MEV thinking focuses on gas price optimization. Post-MEV architecture, like Flashbots' SUAVE or Anoma's intent-centric model, designs for the auction. Execution quality now measures the user's share of the total surplus, not proximity to a theoretical mid-price.
Evidence: Over 90% of Ethereum block space is ordered by MEV-Boost relays, proving block builders control final execution. A user's transaction is raw material in a supply chain for proposer-builder separation (PBS), making naive 'best execution' queries irrelevant.
market-context
THE EXECUTION HIERARCHY
The State of Play: Builders Rule, Users Pay
The MEV supply chain has centralized power at the builder level, forcing protocols to compete for favorable execution.
Builders hold final execution power. The Proposer-Builder Separation (PBS) model outsources block construction to specialized entities like Flashbots and bloXroute. This creates a monopsony where builders dictate transaction ordering, extracting value before users or applications see it.
Protocols must pay for priority. To guarantee user outcomes, dApps like Uniswap and Aave now bid for inclusion via MEV-Share or order flow auctions. This is a direct tax on protocol revenue, shifting costs from end-users to treasury reserves.
Best execution is now a B2B service. The user-facing promise of 'optimal swap' is a lie; the real negotiation happens between Sealed-Bid Auctions and private mempools. Protocols that fail to engage, like early DEX aggregators, experience toxic flow and worse prices.
Evidence: Flashbots controls ~90% of Ethereum blocks post-Merge. UniswapX's intent-based model explicitly cedes routing control to fillers, acknowledging that user-centric execution is commercially non-viable on the public mempool.
key-trends
THE FUTURE OF 'BEST EXECUTION' IN A MEV-EXTRACTED WORLD
Three Irreconcilable Trends
The promise of transparent, fair on-chain execution is colliding with the economic reality of maximal extractable value, forcing a fundamental re-architecture of trading infrastructure.
01
The Problem: The 'Best Price' is a Mirage
On-chain, the public mempool reveals your intent. The quoted price is irrelevant; the final execution price is determined by the MEV supply chain. This creates a ~50-200+ bps hidden tax on every trade, with billions extracted annually from users.
- Front-running and sandwich attacks are systemic, not edge cases.
- DEX aggregators often route to the venue with the highest kickback, not the best fill.
- The 'fair' sequencing of transactions is a solved problem in TradFi, but impossible in a permissionless block space auction.
50-200+ bps
Hidden Tax
$1B+
Annual Extract
02
The Solution: Intent-Based Architectures (UniswapX, CowSwap)
Shift from transaction-based ("do this") to intent-based ("achieve this outcome") systems. Users submit signed declarations of desired end states, which are fulfilled by a competitive network of solvers.
- Removes MEV from user PnL; solvers compete on the net amount they can deliver.
- Enables cross-chain, cross-venue execution in a single gasless signature.
- ~$10B+ in trade volume has already flowed through these systems, proving demand.
Gasless
User Experience
$10B+
Proven Volume
03
The New Battleground: Solver Networks & Shared Orderflow
Best execution migrates from the public mempool to private solver networks and orderflow auctions (OFAs). The value capture shifts from block builders to the entities that aggregate and route intent.
- Projects like Across, Anoma, and SUAVE are building generalized intent solvers and OFA markets.
- The key metric becomes fill rate improvement and net output optimization, not gas price.
- This creates a centralization vs. efficiency trade-off: a few high-performance solvers may dominate, requiring new cryptographic proofs of execution quality.
Fill Rate
Key Metric
OFA
New Market
THE FUTURE OF 'BEST EXECUTION'
The MEV Extraction Matrix: Who Wins, Who Loses?
Comparison of execution paradigms competing to define user outcomes in a world dominated by MEV extraction.
| Core Metric / Feature | Traditional DEX Aggregator (e.g., 1inch) | Intent-Based Solver Network (e.g., UniswapX, CowSwap) | Proposer-Builder Separation (PBS) / SUAVE |
|---|---|---|---|
Primary Value Proposition | Route liquidity across all on-chain pools | Guarantee outcome (price, slippage) via off-chain competition | Decentralize block building to commoditize MEV |
User's Execution Guarantee | None; submits tx to public mempool | Signed intent; solver guarantees fill or reverts | None; submits tx to public mempool or encrypted mempool |
Typique Price Improvement vs. Quote | 0 - 0.3% | 0.3% - 1.5% | 0 - 0.8% (highly variable) |
Who Captures MEV Value? | Searchers & Proposers | Solvers (rebates shared via fee mechanism) | Builders & Proposers (via PBS auctions) |
Front-running Resistance | |||
Requires Native Token for Fees | |||
Critical Dependency | Mempool latency | Solver capital & honesty | Builder decentralization & censorship resistance |
Time to Finality for User | < 30 secs (L1) | ~1-5 mins (batch auction) | < 15 secs (L1) |
deep-dive
THE EXECUTION GAP
The Regulatory Mirage and Technical Realities
Regulatory 'best execution' mandates are a mirage in a world where MEV extraction is the fundamental market structure.
Regulation chases a phantom. The SEC's 'best execution' rule (Reg NMS) assumes a centralized order book, not a decentralized block space auction. On-chain, the winning bid for transaction ordering is the one that maximizes validator profit, not user price improvement.
The real 'best execution' is MEV-aware. Protocols like UniswapX and CowSwap internalize this by outsourcing routing and batching to specialized searchers. Their 'best execution' is the net outcome after all MEV is extracted and possibly shared back via mechanisms like MEV-Share.
Technical infrastructure supersedes policy. The enforceable standard is set by the block builder (e.g., Flashbots SUAVE) and the proposer, not a compliance officer. A user's execution quality is dictated by their integration with this stack, not a regulatory filing.
Evidence: Over 90% of Ethereum blocks are built by MEV-Boost relays, proving validator profit maximization is the dominant execution logic. Protocols ignoring this, like early DEX aggregators, consistently leak value to searchers.
counter-argument
THE ECONOMIC ARGUMENT
Steelman: "It's Just Price Discovery"
A defense of MEV as a necessary market force for efficient cross-domain liquidity.
MEV is inevitable price discovery. In a fragmented multi-chain world, value flows to the most efficient path. Searchers compete to capture this value by identifying and executing optimal trades across venues like Uniswap and Curve, which is the market's mechanism for finding the true price.
The alternative is worse. Without competitive searchers, liquidity remains trapped in isolated pools. Manual bridging and DEX aggregation create worse slippage and latency than a professionalized MEV supply chain that uses Flashbots and private RPCs.
Best execution is a relative metric. The benchmark is not a theoretical zero-MEV state, but the user's next-best alternative. Protocols like CowSwap and UniswapX abstract this by outsourcing routing to a competitive network of solvers, delivering a net improvement.
Evidence: Over $700M in MEV was extracted in 2023, primarily from arbitrage. This volume represents capital efficiently moving assets between chains and pools, a cost users implicitly pay for liquidity anywhere.
protocol-spotlight
FROM ORDER FLOW TO INTENT FLOW
Architecting a Post-Best-Execution World
The naive promise of 'best execution' is dead, consumed by MEV. The new paradigm is intent-based architectures that shift the optimization burden from users to a competitive solver network.
01
UniswapX: The Intent Standard
The first major DEX to fully embrace an intent-based, auction-for-liquidity model. It outsources execution to a competitive network of fillers.
- Key Benefit: Users submit desired outcome (swap X for Y), not a specific path.
- Key Benefit: Fillers compete in a Dutch auction, capturing and redistributing MEV as better prices.
$10B+
Volume
~70%
Gas Saved
02
The Problem: Expressing Intents is Hard
Current intent standards are fragmented. A user's simple goal requires complex, error-prone signature schemes across different solvers like UniswapX, CowSwap, and Across.
- Key Problem: Wallet UX becomes a signature factory, killing composability.
- Key Problem: Solver competition is gated by who can parse the most intent schemas.
10+
Standards
High
Fragmentation
03
The Solution: Intents as a Primitive
The endgame is a shared mempool for signed user intents, not transactions. This creates a universal marketplace for execution.
- Key Benefit: Wallets sign once for a goal; any solver (Anoma, SUAVE, DFlow) can compete to fulfill it.
- Key Benefit: Drives execution quality to theoretical limits, as solvers arbitrage across all liquidity sources.
100x
Liquidity Access
Maximal
Extractable Value
04
The New Risk: Solver Centralization
Optimizing for complex cross-domain intents (via LayerZero, Hyperlane) requires sophisticated AI and capital. This favors a few elite players.
- Key Risk: MEV extraction shifts from validators to a cartel of solvers.
- Mitigation: Cryptographic proofs of execution (e.g., SGX, ZK) to enforce solver honesty and enable permissionless participation.
Oligopoly
Risk
ZK-Proofs
Solution
05
Flashbots SUAVE: The Neutral Chain
A dedicated blockchain for preference expression and auction. It aims to be the decentralized mempool and order flow auction for all chains.
- Key Benefit: Decouples intent dissemination and competition from any single execution environment.
- Key Benefit: Creates a credible neutral platform, preventing Ethereum validators or Solana leaders from monopolizing flow.
Cross-Chain
Scope
Decentralized
Mempool
06
Endgame: Programmable Intents
Intents evolve from simple swaps to complex, conditional logic ("swap if price > X, then bridge to L2, then deposit in lending").
- Key Feature: Turns users into portfolio managers stating goals, not traders micromanaging transactions.
- Key Feature: Solver networks become generalized AI agents, competing on fulfilling multi-step financial strategies.
Multi-Step
Logic
AI Agents
Solvers
risk-analysis
THE FUTURE OF 'BEST EXECUTION' IN A MEV-EXTRACTED WORLD
The Bear Case: Permanently Broken Trust
The promise of a transparent, fair global market is being systematically undermined by MEV, creating a trust deficit that could become permanent if not addressed at the protocol level.
01
The Problem: 'Best Execution' is a Myth
The naive promise of a single, fair price is dead. Every trade is a race where searchers and builders extract ~$1B+ annually from users. The winning transaction is the one that maximizes extractable value, not user outcome.\n- Front-running & Sandwich Attacks are the baseline, not the edge case.\n- Latency Arbitrage creates a multi-tiered market favoring professional infrastructure.\n- Regulatory 'Best Execution' mandates are impossible to satisfy on vanilla public mempools.
$1B+
Annual MEV
~80%
Trades Vulnerable
02
The Solution: Intent-Based Architectures (UniswapX, CowSwap)
Shift from transaction-based to outcome-based systems. Users declare what they want, not how to do it. Solvers compete privately to fulfill the intent, with execution guarantees settled on-chain.\n- MEV becomes a refundable surplus captured for the user, not extracted from them.\n- Privacy via off-chain auction prevents front-running and information leakage.\n- Cross-chain intents (via Across, LayerZero) abstract liquidity fragmentation, making 'best execution' a global search.
100%
MEV Capture
~30%
Better Prices
03
The Problem: Centralization of Trust in Builders
MEV mitigation has centralized block production. Top 3 builders control >80% of Ethereum blocks. This recreates the trusted intermediary problem crypto aimed to solve, creating systemic risk and censorship vectors.\n- Builder cartels can manipulate transaction ordering and censor addresses.\n- Proposer-Builder Separation (PBS) is incomplete without credible decentralization of the builder role.\n- Relay trust assumptions introduce new points of failure and potential fraud.
>80%
Builder Dominance
1-2
Critical Relays
04
The Solution: Enshrined PBS & SUAVE
Push MEV management into the protocol itself. Enshrined Proposer-Builder Separation (ePBS) formalizes roles at the consensus layer. SUAVE creates a decentralized, specialized mempool and executor network.\n- Decentralized block building via a competitive, permissionless marketplace.\n- Pre-confirmation privacy for users, breaking the latency arms race.\n- Cross-chain MEV unification turns fragmented extraction into a composable public good.
0
Trusted Relays
L1 Native
Solution Layer
05
The Problem: User Abstraction Hides the Cost
Wallets and dApps abstract gas and slippage, making MEV invisible. Users see a 'failed transaction' or 'high slippage,' not a sandwich attack costing them 50+ bps. This erodes trust in the interface, not the underlying exploit.\n- Gas sponsorship models obfuscate true cost, shifting value to extractors.\n- Slippage tolerance is a blunt, user-hostile instrument for MEV protection.\n- No audit trail for execution quality prevents accountability and informed choice.
50+ bps
Hidden Cost
0%
Visibility
06
The Solution: Execution Audits & Guarantees (Revert Finance, MEV Blocker)
Make execution quality transparent and enforceable. RPC endpoints with MEV protection (e.g., Flashbots Protect) filter malicious bundles. Post-trade analytics (Revert) quantify value leakage. Smart contract-based guarantees revert trades that don't meet predefined benchmarks.\n- Real-time threat scoring of pending transactions.\n- Proofs of good execution become a standard wallet feature.\n- Reputation systems for searchers and builders based on user outcomes.
99.9%
Attack Filtered
Auditable
All Trades
future-outlook
THE ARCHITECTURE
The Path Forward: From Fiduciary Duty to Cryptographic Guarantees
Best execution migrates from legal promises to verifiable, on-chain logic enforced by protocol design.
Fiduciary duty is unenforceable code. Legal frameworks cannot audit smart contracts or retroactively compensate for extracted MEV. The new standard is cryptographic proof of execution quality, where the settlement layer itself validates the outcome.
Intent-based architectures are the substrate. Protocols like UniswapX and CowSwap abstract transaction construction, delegating route discovery to a competitive solver network. Users submit desired outcomes, not specific instructions, shifting the burden of optimal execution.
Cross-domain guarantees require new primitives. Projects like Across and LayerZero are evolving from simple asset bridges to intent fulfillment layers. Their value proposition shifts from 'move tokens' to 'guarantee the best rate' across any chain, verified on-chain.
The endpoint is programmable settlement. The final state is not a DEX trade but a verifiably optimal bundle executed by a searcher via Flashbots' SUAVE or a similar MEV marketplace. The user's wallet or a delegated agent cryptographically attests to the result.
takeaways
THE EXECUTION LAYER WAR
TL;DR for Protocol Architects
MEV extraction is the new transaction fee. The future belongs to protocols that abstract it away, not those who ignore it.
01
The Problem: Your Users Are Paying a Hidden Tax
Every DEX swap, NFT mint, or loan liquidation leaks value to searchers. This is not a bug; it's the market price of on-chain liquidity. The result is systematic value extraction from your protocol's users, creating a poor UX and limiting adoption.
- Typical Cost: 5-100+ bps per swap, often exceeding the stated protocol fee.
- Hidden Impact: Front-running, sandwich attacks, and failed transactions.
5-100+ bps
Hidden Tax
~$1B+
Annual Extract
02
The Solution: Integrate an Intent-Based Solver Network
Shift from transaction-based to outcome-based execution. Let users declare what they want (e.g., "swap X for Y at best rate") and let a competitive network of solvers (like UniswapX, CowSwap, 1inch Fusion) compete to fulfill it. This inverts the MEV game.
- Key Benefit: Users get guaranteed price or revert, eliminating slippage uncertainty.
- Key Benefit: Solvers internalize MEV, converting it into better execution for the user.
~0 slippage
Guaranteed
Solver Competition
New Fee Market
03
The Architecture: Private Order Flow & Encrypted Mempools
Prevent front-running by keeping transactions private until execution. Protocols must route orders through systems like Flashbots SUAVE, Shutter Network, or EigenLayer's MEVM. This creates a sealed-bid auction for block space.
- Key Benefit: Atomic composability without the risk of exploitation.
- Key Benefit: Enables complex, multi-step DeFi strategies that are currently impossible in the public mempool.
>99%
Attack Reduction
Secure Bundles
New Primitive
04
The Endgame: Cross-Chain Execution as a Commodity
Best execution will span multiple chains and liquidity venues. Protocols like Across, Socket, and LayerZero are evolving from simple bridges into cross-chain intent orchestrators. Your protocol's liquidity becomes virtualized across all chains.
- Key Benefit: Unified liquidity access, abstracting chain fragmentation from the user.
- Key Benefit: Solver networks will compete across chains, driving execution costs toward zero.
All Chains
Single Pool
Cost → Zero
Long-Term Trend
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