MEV is an execution cost. The 'value' in Maximal Extractable Value is the delta between a user's worst acceptable price and the price a searcher can achieve. This delta is the implicit cost users pay for block space and settlement latency, now quantified and monetized by sophisticated actors.
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The Future of MEV is Tied to Execution Cost Minimization
MEV is no longer just about frontrunning. The dominant vector is now the microscopic optimization of gas costs within the block, turning execution efficiency into a primary profit engine for searchers and builders.
introduction
THE COST CURVE
Introduction
The evolution of MEV is a direct function of the relentless drive to minimize the cost of execution.
Minimization drives innovation. The search for cheaper, faster execution created the searcher-builder-proposer separation, enabling specialized firms like Flashbots and bloXroute to compete on efficiency. This specialization directly lowers the cost of capturing MEV, which in turn lowers the tax on end-users.
The endgame is intent abstraction. Protocols like UniswapX, CowSwap, and Across are shifting the paradigm from transaction execution to intent fulfillment. Users express a desired outcome, and a network of solvers competes to fulfill it at the lowest net cost, internalizing and minimizing MEV as a core part of the execution process.
Evidence: The rise of order flow auctions (OFAs) and shared sequencers like Espresso and Astria demonstrates this. They commoditize block space access, turning MEV from a rent into a competitive market fee, forcing the cost toward the marginal price of computation and data availability.
thesis-statement
THE EXECUTION COST MINIMIZATION
The Core Thesis: MEV is an Efficiency Game
The future of MEV extraction is determined by the race to minimize the total cost of execution across the transaction supply chain.
MEV is a cost center. Every dollar extracted by searchers is a dollar lost to the user or the protocol. The market's equilibrium shifts towards builders and searchers who minimize this total cost, making execution cost minimization the primary competitive axis.
The winning stack is vertically integrated. The separation between searchers, builders, and proposers creates inefficiencies. Protocols like Flashbots' SUAVE aim to collapse this stack, reducing latency and cost by internalizing the entire flow from intent to block production.
Cross-domain MEV is the next frontier. The largest inefficiencies exist between chains and rollups. LayerZero and Across Protocol are building generalized messaging layers that treat cross-chain arbitrage as a single atomic transaction, eliminating the multi-step cost and risk of traditional bridging.
Evidence: Ethereum's PBS reduced average MEV extraction costs by ~20% by introducing builder-proposer specialization. The next 50% reduction will come from integrating intent-based systems like UniswapX directly into the execution layer.
key-trends
EXECUTION AS THE BATTLEGROUND
Key Trends: The New MEV Vectors
The next wave of MEV competition is shifting from pure search to a war over execution infrastructure and cost minimization.
01
The Problem: Expensive, Inefficient Execution
General-purpose block builders and sequencers bundle user transactions inefficiently, creating ~$1B+ in annual MEV leakage and high gas costs for users.
- High Latency: Multi-second finality leaves value on the table.
- Wasted Gas: Redundant computation across parallel chains.
- Opaque Pricing: Users pay for bloated blocks, not just their own execution.
$1B+
Annual Leakage
2-12s
Finality Latency
02
The Solution: Specialized Execution Layers (EigenLayer, Espresso)
Decoupling execution from consensus creates a competitive market for block space, forcing builders to compete on cost and speed.
- Cost Minimization: Dedicated, optimized VMs reduce overhead for specific app types (e.g., gaming, DeFi).
- Latency Arbitrage: Faster finality (sub-second) via shared sequencers captures new MEV.
- Intent-Driven Flow: Systems like UniswapX and CowSwap route to the cheapest, fastest executor.
~500ms
Target Latency
-30%
Gas Cost Target
03
The New Vector: Cross-Chain MEV & Shared Sequencing
Atomic arbitrage across rollups (Ethereum L2s, Solana, Cosmos) is the next frontier, requiring new infrastructure.
- Unified Liquidity: Protocols like LayerZero and Across enable atomic cross-chain swaps.
- Sequencer Extractable Value (SEV): The entity controlling cross-chain transaction ordering captures new rent.
- Infrastructure Plays: Winning requires low-latency messaging and capital-efficient bridging.
$100M+
Cross-Chain Arb
10x
Complexity Increase
04
The Endgame: MEV-Aware Application Design
The most valuable protocols will internalize MEV, turning a cost into a feature through novel architecture.
- In-App Order Flow Auctions: Like CowSwap, but native to any DEX or lending market.
- Proposer-Builder Separation (PBS) at the App Layer: Apps run their own builders to capture value for users.
- MEV-Refunding Transactions: Users get a rebate on gas from captured arbitrage, flipping the economic model.
>90%
OF Capture Target
Net Zero
User Gas Cost
EXECUTION LAYER STRATEGIES
The Gas Cost Arbitrage Matrix
Comparative analysis of dominant strategies for minimizing execution costs, the primary vector for MEV extraction in a post-Danksharding world.
| Core Mechanism | Private Orderflow Auctions (POFA) | Intent-Based Solvers | Shared Sequencers |
|---|---|---|---|
Primary Cost Target | Priority Gas Auction (PGA) Premium | Solver Overhead & Failed Execution | Cross-Domain Sequencing Latency |
Typical User Savings | 80-95% of PGA cost | 5-15% better than AMM rate | N/A (L2/L3 infra) |
Time to Finality | < 12 seconds | 1-5 minutes (batching) | < 3 seconds (pre-confirmations) |
Requires Native Token | |||
Key Infrastructure | Flashbots Protect, RPC Providers | UniswapX, CowSwap, Across | Espresso, Astria, Radius |
MEV Redistribution | To user via rebate | To solver as profit | To sequencer/validator set |
Maximal Extractable Value (MEV) | Extracts & returns PGA | Transforms into JIT liquidity | Captures cross-domain arbitrage |
Failure State Risk | Tx reverts, gas lost | Partial fill, price slippage | Sequencer censorship |
deep-dive
THE COST OF EXECUTION
Deep Dive: How Searchers Weaponize Gas Optimization
Searcher profitability is now defined by gas arbitrage, where the lowest-cost execution path wins.
Gas is the ultimate constraint. Every micro-optimization in transaction ordering, calldata encoding, and state access translates directly to profit. Searchers like Flashbots and bloXroute compete on execution cost, not just opportunity discovery.
The battlefront is the EVM opcode. Searchers deploy custom contracts with optimized bytecode to undercut generic solvers. This creates a computational arms race where the most efficient code wins the block space auction.
Layer 2s redefine the game. On Arbitrum and Optimism, the cost of posting data to L1 dominates. Searchers now optimize for calldata compression and batch inclusion, shifting the competitive edge from pure speed to data efficiency.
Evidence: In Q1 2024, searchers using Reth and Geth client optimizations captured over 60% of high-value MEV bundles on Ethereum mainnet by reducing gas costs by 15-30% per transaction.
counter-argument
THE INCENTIVE MISMATCH
Counter-Argument: Isn't This Just a Builder's Problem?
Execution cost minimization shifts the MEV burden from builders to protocols, forcing systemic architectural changes.
MEV is a protocol problem. Builders are a symptom of the inefficiency in the execution layer. Minimizing execution costs directly reduces the extractable value pool, making the builder role less profitable and less necessary.
The incentive mismatch is structural. Builders profit from opaque order flow. Protocols like UniswapX and CowSwap demonstrate that exposing order flow to competition through intent-based architectures eliminates this opacity at the source.
Evidence: The rise of shared sequencers (e.g., Espresso, Astria) and proposer-builder separation (PBS) shows the market is already pricing execution as a commodity. The next step is protocols internalizing this function.
protocol-spotlight
EXECUTION COST MINIMIZATION
Protocol Spotlight: Who's Winning the Efficiency War?
MEV is no longer just about extraction; the new frontier is minimizing the cost of execution itself. The protocols that win will be those that deliver finality at the lowest total cost to users.
01
The Problem: The Cost of Atomicity
Cross-chain arbitrage and complex DeFi strategies require atomic execution across multiple chains or L2s. Traditional bridges and sequencers introduce latency and fragmentation, forcing users to pay for redundant security and liquidity costs.
- Sequencer Lock-In: Users pay a premium for atomicity via a single sequencer's domain (e.g., a single L2).
- Bridge Slippage & Delays: Multi-step processes across bridges like LayerZero or Axelar incur latency and liquidity fees on each hop.
2-30s
Bridge Latency
50-200bps
Slippage Cost
02
The Solution: Intents & Shared Sequencing
Decoupling transaction construction from execution. Users express a desired outcome (an intent), and a competitive network of solvers competes to fulfill it at the lowest cost, abstracting away chain boundaries.
- Solver Competition: Protocols like UniswapX, CowSwap, and Across use solvers to find optimal routing, often bypassing AMM pools entirely.
- Shared Sequencing Layers: Projects like Espresso and Astria create a neutral marketplace for block space, allowing rollups to share sequencing for atomic cross-rollup composability.
~20%
Avg. Cost Save
0 Gas
For Failed Txs
03
The Winner: Parallel EVMs with Native MEV Capture
The endgame is execution environments designed from first principles to minimize redundant work. Parallel execution engines like Monad and Sei V2 process non-conflicting transactions simultaneously, drastically reducing the time-to-finality where MEV can be extracted.
- Parallel Execution: Increases throughput, reducing the congestion premium embedded in gas fees.
- Native MEV Redistribution: Protocols like Flashbots SUAVE aim to build a decentralized block builder network, capturing MEV value and potentially redistributing it to users or the protocol.
10,000+
TPS Target
<1s
Time to Finality
04
The Meta-Solution: Prover Networks as a Cost Center
The largest execution cost for ZK-rollups is proof generation. Dedicated prover networks like RiscZero and Succinct are commoditizing this process, driving down the fixed cost of verification through specialization and competition.
- Proof Marketplaces: Rollups like Polygon zkEVM and Scroll can auction proof generation, creating a competitive cost floor.
- Hardware Acceleration: Specialized hardware (GPUs, FPGAs) for proof generation turns a capital expense into a variable, outsourced cost, mirroring the cloud computing model.
-90%
Proof Cost Trend
~500ms
Proof Time
risk-analysis
EXECUTION COST IS THE NEW BATTLEFIELD
Risk Analysis: The Centralization & Obfuscation Threat
Minimizing execution cost is the primary vector for MEV extraction, creating systemic risks of centralized control and hidden value capture.
01
The Problem: Opaque Order Flow Auctions (OFAs)
Seekers like Flashbots Protect and CoW Swap route user transactions through private mempools to searchers, obfuscating the true cost of execution.\n- Creates information asymmetry: Users cannot audit the final execution price vs. the public market.\n- Centralizes power: A few dominant relay/aggregator entities become the gatekeepers of efficient execution.
>90%
OF MEV Flow
~100ms
Auction Latency
02
The Problem: Builder Monopolies & PBS
Proposer-Builder Separation (PBS) concentrates block building into a few entities (e.g., Flashbots, bloXroute, Relays).\n- Vertical integration risk: Builders can own searchers, OFAs, and relays, creating a closed loop.\n- Cost minimization becomes rent extraction: The builder capturing the most MEV can outbid others, centralizing block production.
~80%
Top 5 Builders
$1B+
Annualized MEV
03
The Solution: Credibly Neutral Execution Layers
Protocols like EigenLayer, Espresso, and shared sequencers aim to decentralize the execution layer itself.\n- Decouples trust from profit: Execution is a verifiable commodity, not a privileged service.\n- Enables permissionless competition: Any actor can participate in block building, reducing monopolistic pricing.
$15B+
Restaked TVL
L2 Rollups
Primary Clients
04
The Solution: Intent-Based Architectures
Paradigms like UniswapX, Across, and Anoma shift the burden from users (transactions) to solvers (intents).\n- Shifts competition to solver networks: Solvers compete on fulfillment cost, not just inclusion.\n- Improves UX & reduces leakage: Users specify the what, not the how, minimizing MEV surface area.
-20%
Avg. Swap Cost
Multi-Chain
Native Design
05
The Problem: Cross-Chain MEV Obfuscation
Bridges and interoperability layers (e.g., LayerZero, Wormhole, Axelar) introduce new, opaque MEV vectors.\n- Execution cost is hidden in exchange rates and latency: Arbitrage between chains is a black box for users.\n- Amplifies centralization: Relayers and oracles become critical, trusted intermediaries for cross-chain value.
$100M+
Bridge TVL Risk
3-5 Relayers
Typical Quorum
06
The Solution: MEV-Aware Protocol Design
Next-gen L1s (e.g., Monad, Sei) and L2s are baking MEV mitigation into consensus (e.g., time-boost auctions, encrypted mempools).\n- Protocols capture and redistribute value: MEV can be a public good via burning or staker rewards.\n- Increases economic security: Makes 51% attacks more expensive by raising the opportunity cost for validators.
10k TPS
Target Throughput
Native
MEV Resistance
future-outlook
THE COST CURVE
Future Outlook: Theendgame is Specialized Execution Layers
The future of MEV is defined by the race to minimize the total cost of execution, which will fragment the monolithic block builder role into specialized, competitive layers.
MEV is an execution cost. The total extractable value for a user's transaction is the delta between their maximum willingness to pay and the actual cost of execution. Minimizing this cost is the primary vector for protocol competition.
Specialization fragments the builder. The monolithic block builder role will disaggregate. One layer handles intent expression (UniswapX, CowSwap), another handles cross-domain routing (Across, LayerZero), and a final layer executes on the cheapest destination chain.
The end-state is commoditized execution. Execution becomes a low-margin commodity. Value accrues to the coordination and routing layers that secure the best price, not the raw compute. This mirrors the evolution from integrated mainframes to cloud services.
Evidence: Arbitrum's BOLD fraud proof system and Optimism's Cannon demonstrate that verification costs are plummeting. When verifying execution is trivial, the economic focus shifts entirely to sourcing and routing the cheapest compute.
takeaways
EXECUTION IS THE NEW BATTLEGROUND
Key Takeaways for Builders and Architects
MEV is no longer just about extraction; it's about minimizing the total execution cost for users, which is the sum of gas, slippage, and captured value.
01
The Problem: Opaque, Inefficient Order Flow
Retail order flow is aggregated and sold to the highest bidder, creating a ~$1B+ annual MEV tax on users. This opaque auction process adds latency and cost, with no guarantee of optimal execution.
- Key Benefit 1: Direct user-to-solver matching eliminates rent-seeking intermediaries.
- Key Benefit 2: Transparent competition forces solvers to pass savings back to the user.
$1B+
Annual Tax
~500ms
Added Latency
02
The Solution: Intent-Based Architectures (UniswapX, CowSwap)
Shift from transaction-based to outcome-based systems. Users submit intents (e.g., "swap X for Y at best price"), and a network of solvers competes to fulfill them. This commoditizes block space and bundles execution.
- Key Benefit 1: ~20-30% better prices via optimized routing and MEV capture redirection.
- Key Benefit 2: Gasless signing and guaranteed execution, abstracting away chain-specific complexity.
20-30%
Better Price
Gasless
User Experience
03
The Infrastructure: Shared Sequencers & SUAVE
Execution minimization requires a neutral, competitive marketplace for block space. Shared sequencer networks (e.g., Espresso, Astria) and block-building markets like SUAVE decentralize ordering to prevent monopolistic pricing.
- Key Benefit 1: Censorship-resistant order flow with permissionless inclusion.
- Key Benefit 2: Cross-domain liquidity aggregation reduces fragmentation cost, enabling native intents across Ethereum, L2s, and alternative chains like Solana.
Neutral
Ordering
Cross-Chain
Liquidity
04
The Metric: Total Execution Cost (TEC)
Architects must optimize for Total Execution Cost = Gas + Slippage + Captured Value. This shifts the focus from pure throughput (TPS) to economic finality. Protocols that minimize TEC will win the next wave of users.
- Key Benefit 1: Creates a directly measurable UX KPI for infrastructure.
- Key Benefit 2: Aligns protocol incentives with user outcomes, moving beyond speculative tokenomics.
TEC
North Star Metric
User-Aligned
Incentives
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