Why Shared MEV is a Pipe Dream for Decentralized Networks

Shared MEV requires validators to act against their own profit-maximizing interests. In a competitive block-building market, the highest bid from a private channel (e.g., Flashbots Protect, Titan Builder) will always trump a protocol's shared pool.

• Economic Inevitability: Rational actors defect. A >99% honest participation rate is required for stability; real-world systems see rapid erosion.
• Free-Rider Attacks: Validators can claim rewards without contributing value, draining the shared pool.

The entities with the most valuable MEV opportunities (searchers, sophisticated bots) have zero incentive to reveal them to a public, shared pool. This creates a fundamental market for lemons.

• Adverse Selection: Only low-value, hard-to-extract arbitrage is submitted to the public mempool. High-frequency DEX arbitrage and liquidations remain private.
• Data is Power: Firms like Jump Crypto and GSR invest millions in infrastructure for a ~100ms latency edge; they won't donate that edge to a commons.

Formalizing MEV redistribution transforms block production from a technical service into a clear financial product, attracting immediate regulatory scrutiny.

• Security Classification: A token representing a claim on future MEV revenue looks like a security to the SEC or FCA.
• Taxable Event Nightmare: Every micro-reward distribution creates a tax liability for validators and delegators, a compliance impossibility at scale.

Shared MEV requires perfect, trustless coordination among validators, which is impossible in a permissionless, adversarial environment. The Nash equilibrium is for the largest, most sophisticated actor to defect and capture value privately.

• Free-Rider Problem: Validators have no incentive to share profitable opportunities they discover.
• Information Asymmetry: The builder with the best data (e.g., from Flashbots SUAVE, BloXroute) will always outcompete a collective.
• Latency Kills Consensus: Adding a revenue-sharing round adds ~100-500ms of latency, making the chain vulnerable to attacks.

Top-tier builders like Jito Labs and Titan operate on razor-thin margins, competing on sub-millisecond latency and exclusive order flow. Sharing their proprietary edge destroys their business model.

• Race to the Bottom: Revenue sharing turns a competitive advantage into a public good, eliminating R&D incentives.
• Centralizing Force: Only a centralized, trusted third party (like a Coinbase or Binance) could enforce sharing, defeating decentralization.
• Empirical Evidence: No major chain has sustained a viable shared MEV model; attempts revert to builder-dominated markets.

For validators, relying on shared MEV is a path to economic irrelevance. Revenue becomes unpredictable and commoditized, while operational costs (hardware, bandwidth) remain high.

• Revenue Volatility: Shared MEV pools turn staking yield into a lottery, undermining Ethereum's security model.
• CAPEX Arms Race: To capture any MEV, validators must still invest in high-performance relays and mev-boost infrastructure, centralizing stake.
• The Real Solution: Focus on proposer-builder separation (PBS) and robust block auction markets—not redistribution fantasies.

Cross-chain shared MEV, as hinted by protocols like LayerZero, amplifies these problems. It introduces new trust assumptions and complexity, creating more attack surfaces rather than solving the core economic dilemma.

• Trust Minimization Failure: Requires oracles or relayers to adjudicate cross-chain state, a known vulnerability.
• Complexity Explosion: Managing MEV distribution across 10+ chains with different finality times is computationally and economically infeasible.
• Outcome: Creates a meta-layer of centralized MEV cartels, not a decentralized commons.