Block Inclusion

The mempool (memory pool) is a node's holding area for unconfirmed transactions broadcast to the network. Validators select transactions from their local mempool to propose in a new block. Key characteristics include:

• Transaction Propagation: Transactions are gossiped peer-to-peer.
• Fee Market: Users attach gas fees or priority fees to incentivize inclusion; higher fees generally lead to faster inclusion.
• Eviction: Nodes may drop low-fee or invalid transactions to manage memory.

In many modern chains like Ethereum, the role of creating a block is separated from proposing it. This is central to proposer-builder separation (PBS).

• Block Builders: Specialized entities (e.g., via MEV-Boost) compete to create the most profitable block by ordering transactions and extracting MEV.
• Validators/Proposers: Choose the most valuable block from builders' bids, often based on the attached fee. This decouples block construction from consensus.

A proposed block is not final until the network reaches consensus. The mechanism varies by protocol:

• Proof-of-Work (PoW): Inclusion is probabilistic; finality increases with subsequent blocks (confirmations).
• Proof-of-Stake (PoS): Validators attest to blocks. Finality is achieved through a voting process (e.g., Casper-FFG in Ethereum), making reversion extremely costly.
• Tendermint BFT: Provides instant finality upon a block's acceptance by a supermajority of validators.

The order of transactions within a block is a powerful and valuable right. Maximal Extractable Value (MEV) refers to profit validators or builders can extract by reordering, including, or censoring transactions.

• Front-running: Placing a transaction ahead of a known pending trade.
• Back-running: Placing a transaction immediately after a known event.
• Sandwich Attacks: A combination of front-running and back-running around a victim's trade. MEV directly impacts user execution and is a core consideration in block construction.

To prevent transaction censorship, some protocols implement inclusion lists. A proposer may be required to include certain transactions (e.g., those from a previous block builder) in their proposed block.

• Ethereum's PBS with CrLists: Commit-Reveal schemes allow builders to commit to including specific transactions, enforced by the protocol.
• Purpose: Ensures fair access to block space and reduces a validator's ability to arbitrarily exclude transactions for malicious or economic reasons.

Each block has a maximum computational and data capacity, enforced by a block gas limit (Ethereum) or block size limit (Bitcoin). This constrains inclusion.

• Gas: A unit measuring computational work. The total gas of all transactions in a block cannot exceed the limit.
• Dynamic Adjustment: Limits can adjust based on network demand (e.g., Ethereum's base fee mechanism in EIP-1559).
• Implication: During high demand, only transactions with sufficient fees are included, creating a fee auction.

A priority fee or tip is a direct payment from a user to a block producer, paid on top of the base network fee. It acts as a bribe to incentivize the validator to include a transaction sooner. In systems like Ethereum post-EIP-1559, this is the primary mechanism users employ to compete for block space when demand is high.

• Purpose: To jump the queue and reduce confirmation time.
• Mechanism: Paid directly to the validator, not burned.
• Example: A user might attach a 0.01 ETH tip to ensure their arbitrage transaction is included in the next block.

Maximal Extractable Value (MEV) is the total value a block producer can extract from the opportunity to create a block, beyond standard block rewards and fees. This includes profits from reordering, inserting, or censoring transactions (e.g., front-running a large DEX trade).

• Influence: Validators are economically incentivized to maximize their revenue, often using MEV-Boost relays on Ethereum or similar services on other chains.
• Impact: Can lead to transaction reordering, causing sandwich attacks and increased latency for regular users.

Block inclusion is constrained by consensus rules and slashing conditions. Validators must produce valid blocks that comply with the protocol, or they risk having their staked funds slashed.

• Validity Rules: Transactions must be correctly signed, have sufficient gas, and not cause state transitions that violate protocol rules.
• Censorship Resistance: Some protocols have crticiality or proposer-builder separation (PBS) mechanisms to discourage transaction censorship.
• Consequence: Including invalid transactions results in the block being rejected by the network, costing the validator its reward.

The base fee is a protocol-determined minimum cost per unit of gas that is burned, dynamically adjusting with network demand. During periods of congestion, the base fee rises, making transaction inclusion more expensive for users.

• Mechanism: Acts as a market-clearing price for block space, regulating demand.
• Inclusion Impact: Users must outbid the base fee with their total fee (base fee + priority fee). Low-fee transactions may be stuck in the mempool indefinitely during high congestion.
• Example: Ethereum's base fee updates every block based on the fullness of the previous block.

The method by which the network selects the next block proposer fundamentally influences inclusion. In Proof-of-Stake (PoS), selection is often pseudo-random, weighted by the validator's stake. In Proof-of-Work (PoW), it's the first miner to solve the cryptographic puzzle.

• PoS (e.g., Ethereum): A validator knows its slot in advance, allowing for transaction bundle preparation via MEV-Boost.
• PoW (e.g., Bitcoin): The unpredictability of miner discovery reduces some forms of MEV but does not eliminate them.
• Fairness: The algorithm determines how often a specific entity can influence inclusion.

The mempool (memory pool) is a node's holding area for pending, unconfirmed transactions. Block producers source transactions from their view of the mempool. Its dynamics directly affect inclusion.

• Visibility: Not all nodes see the same transactions at the same time due to network propagation delays.
• Strategic Behavior: Users and bots may use private transaction pools or flashbots bundles to bypass the public mempool, offering transactions directly to validators.
• Front-running Risk: Transactions visible in the public mempool are susceptible to being front-run by other parties.

The mempool (memory pool) is a node's holding area for unconfirmed transactions broadcast to the network. Validators select transactions from their local mempool to include in the next block they propose. Key characteristics include:

• Transaction Propagation: Transactions are gossiped peer-to-peer.
• State Management: Nodes maintain their own view, leading to slight variations.
• Eviction Policies: Full mempools may drop low-fee or stale transactions.

In networks like Ethereum, block space is a scarce resource allocated via a fee market. Validators are economically incentivized to prioritize transactions offering the highest total fee (gas price * gas units). This creates a competitive auction where users bid for inclusion.

• Base Fee: A network-calculated minimum (burned in EIP-1559).
• Priority Fee (Tip): An extra incentive paid directly to the validator.

Only the designated block proposer for a given slot can create and broadcast a new block. In Proof-of-Stake (PoS) systems like Ethereum, proposers are chosen pseudo-randomly based on their staked ETH. Their key responsibilities are:

• Aggregating Transactions: Selecting a set from the mempool.
• Constructing Block: Ordering transactions and executing them locally.
• Signing & Propagating: Cryptographically signing the block header and broadcasting it to the network.

MEV is the profit a validator can extract by strategically including, excluding, or reordering transactions within a block beyond standard block rewards and gas fees. It significantly influences inclusion logic.

• Common Forms: Arbitrage, liquidations, and front-running.
• MEV-Boost: A middleware that allows Ethereum validators to outsource block building to specialized searchers and builders via a marketplace, often increasing their rewards.

Inclusion Lists are a proposed mechanism for Proposer-Builder Separation (PBS) to prevent censorship. They allow a block proposer to force the inclusion of specific, eligible transactions that a block builder may have excluded.

• Anti-Censorship: Ensures transactions cannot be easily filtered out.
• Builder Compliance: The winning builder must include all transactions from the list or forfeit the block.

Block inclusion is the first step; finality is the irreversible confirmation. Understanding the difference is critical for application design.

• Inclusion: Transaction is in a proposed block. State changes are tentative and can be reverted in a chain reorg.
• Finality: In PoS Ethereum, a block is finalized after two-thirds of validators attest to a checkpoint, making reversion extremely costly and unlikely.

The maximum profit a block producer (miner or validator) can extract from their ability to arbitrarily include, exclude, or reorder transactions within a block. This creates a value extraction race and can lead to network inefficiencies.

• Sources: Arbitrage, liquidations, and front-running opportunities.
• Impact: Can increase transaction costs and create network congestion.
• Mitigation: Techniques like fair ordering and commit-reveal schemes aim to reduce negative externalities.

A competitive bidding process where users attach fees to their transactions to incentivize block producers to prioritize them for inclusion. This is the primary economic mechanism for block space allocation in networks like Ethereum.

• Fee Markets: High demand leads to gas price spikes as users outbid each other.
• Fee Estimation: Wallets and users rely on algorithms to predict optimal fees for timely inclusion.
• EIP-1559: Introduced a base fee that is burned and a priority fee (tip) for the miner, creating a more predictable fee market.

A core property of decentralized blockchains where no single entity can prevent a valid transaction from being included in a block. This is enforced by a permissionless and decentralized set of block producers.

• Threats: Regulatory pressure on centralized mining pools or validators to censor specific addresses.
• Measures: Proof-of-stake diversification, permissionless relay networks, and credibly neutral protocol design.
• Importance: Essential for financial sovereignty and uncensorable applications.

A type of attack where a malicious miner or validator secretly mines an alternative chain (a chain reorganization or reorg) to retroactively change the ordering or inclusion of past transactions, often to capture MEV.

• Mechanism: The attacker withholds a newly mined block, continues mining privately, and then releases a longer chain that excludes or reorders transactions from the public chain.
• Defense: Network security relies on the honest majority assumption and the economic cost of such attacks outweighing potential profit.

A probabilistic guarantee that a transaction broadcast to the network will eventually be included in a block, assuming it pays a sufficient fee. It prevents indefinite exclusion but does not guarantee ordering fairness.

• Guarantee: Over time, as different, potentially honest block producers are selected, a valid transaction will be processed.
• Limitation: Does not protect against temporal unfairness like front-running within a single block.
• Foundation: This principle underpins the liveness of permissionless blockchain networks.

A specialized ecosystem, particularly in Ethereum's post-merge landscape, where searchers (who identify profitable transaction bundles) and builders (who construct optimal blocks) compete to sell block proposals to validators.

• Proposer-Builder Separation (PBS): A design paradigm that separates the entity that builds a block from the entity that proposes it to the network.
• Purpose: Aims to democratize access to MEV and reduce the centralizing pressure on validators.
• Implementation: Facilitated by mev-boost and native protocol-level solutions.