Cross-Chain MEV Auction

At its core, a Cross-Chain MEV Auction creates a market for block space across interconnected chains. Instead of a validator on Chain A and a sequencer on Chain B acting independently, they can coordinate to sell the right to propose a synchronized block on both chains. This allows a searcher to execute an atomic cross-chain arbitrage, with the auction revenue shared between the chain operators.

The primary technical enabler is the guarantee of atomic execution across chains. Winning bidders in the auction receive a commitment that their bundle of transactions will be included in the next block on all participating chains, or in none. This eliminates execution risk for complex MEV strategies like:

• Cross-DEX Arbitrage: Buying an asset on Chain A and selling it on Chain B.
• Cross-Chain Liquidations: Repaying a debt on one chain by providing collateral from another via a bridge.

Auction proceeds are distributed to the block producers (validators/sequencers) of the involved chains according to a pre-defined split. This aligns their economic incentives to cooperate rather than compete in a zero-sum game for isolated MEV. The model turns potentially toxic cross-chain MEV into a verifiable, on-chain revenue stream for network security, similar to priority fees (tips) but for multi-chain coordination.

Specialized infrastructure providers, often called Relayers or Cross-Chain Messengers, are critical. They:

• Discover and broadcast opportunities across chains.
• Run or facilitate the auction mechanism.
• Guarantee inclusion by communicating the winning bundle to each chain's producer.
• Ensure validity by verifying state proofs or using light clients. Protocols like Chainscore act as this neutral coordination layer.

This differs fundamentally from single-chain MEV:

• Scope: Targets value flows between chains, not within one chain's mempool.
• Coordination: Requires explicit cooperation between independent chain operators.
• Extraction: Moves from a first-come-first-served model (e.g., gas auctions) to a sealed-bid auction model for a coordinated block space bundle.
• Finality Risk: Must account for different block times and finality conditions across chains.

While increasing efficiency, the mechanism introduces new considerations:

• Validator Cartels: Risk that dominant validators on multiple chains collude to control the auction.
• Relayer Trust: Dependence on the relayer's correct execution and liveness.
• Chain Sovereignty: Participating chains cede some control over block ordering to an external auction mechanism. Designs often incorporate slashing conditions and decentralized relay networks to mitigate these risks.

A primary use case driving auction development. A typical flow involves:

1. Opportunity Discovery: A searcher's bot detects a price discrepancy for an asset between Ethereum and Avalanche.
2. Bundle Construction: The searcher builds a transaction bundle to buy low on one chain and sell high on the other, including bridge operations.
3. Auction Participation: The bundle is submitted to a cross-chain auction platform (like SUAVE), bidding a portion of the expected profit for priority.
4. Execution: The winning validator or builder executes the atomic cross-chain sequence.

Implementing cross-chain MEV auctions requires solving several complex problems:

• Atomicity: Ensuring the entire multi-chain transaction sequence either succeeds or fails completely to prevent partial execution losses.
• Latency: Managing variable block times and finality across different chains during the auction and execution phase.
• Trust Minimization: Designing systems that do not rely on centralized, trusted operators for cross-chain coordination.
• Fee Markets: Creating a unified fee/priority model that works across heterogeneous blockchain economies.

The relayer is the trusted off-chain entity that collects bids and constructs the final cross-chain bundle. This creates a central point of failure and potential censorship. Security relies heavily on the relayer's honest execution and robust infrastructure to prevent front-running or manipulation of the auction itself. The economic model must incentivize the relayer to act correctly while disincentivizing malicious behavior.

A core security promise is atomic execution: either all transactions in the cross-chain bundle succeed across all chains, or none do. This prevents partial failures that could leave users' funds in an undesirable state. Achieving this requires sophisticated contingent transaction logic and coordination between chains, often relying on timeouts and rollback mechanisms if execution fails on any one chain.

The auction mechanism aims to improve economic efficiency by allowing searchers to bid for the right to capture cross-chain arbitrage opportunities. This can lead to better price discovery and reduced slippage for users. However, it also centralizes the capture of MEV, raising questions about value distribution. Does the auction revenue benefit the relayer, the underlying chains' validators, or the end users via MEV redistribution?

For the system to work, validators on the destination chains must be incentivized to include the winning bundle. This is typically done by sharing a portion of the auction's winning bid (payment flow) with the validators. Misaligned incentives could lead to validators ignoring the bundle to capture MEV locally, breaking the atomic guarantee. The auction must offer a sufficient premium over native chain MEV.

The system's liveness depends on the continuous operation of the relayer and the willingness of validators to participate. A malicious or malfunctioning relayer could censor certain transactions or types of arbitrage. Designs must consider relayer decentralization (e.g., through a committee or permissionless relay network) and fallback mechanisms to preserve the censorship-resistant properties of the underlying blockchains.

Introducing a new auction layer and cross-chain communication significantly increases system complexity. This expands the attack surface for exploits, including:

• Bid manipulation or auction griefing
• Data availability issues for bundle contents
• Oracle manipulation if pricing relies on external feeds
• Smart contract vulnerabilities in the auction or settlement contracts on each chain. Rigorous formal verification and audits are critical.

These are specialized bots or entities that identify profitable opportunities across blockchains, such as price discrepancies between DEXs on different networks. They construct complex cross-chain arbitrage bundles and submit bids to validators or relayers, paying a premium for the right to have their transaction sequence included in a block. Their profit is the MEV extracted minus the auction fee paid.

In a cross-chain context, these are the block producers on the destination chain (e.g., Ethereum validators). They run or connect to auction software that accepts bids from searchers. By selling block space to the highest bidder, they capture a portion of the MEV revenue that would otherwise be extracted by searchers without compensation to the network. This transforms MEV from a negative externality into a protocol revenue stream.

Critical infrastructure for executing cross-chain bundles. Relayers (like Across, Socket) or arbitrary message bridges pass data and proofs between chains. Searchers must coordinate their transactions so actions on Chain A (e.g., buying an asset) are atomically settled with actions on Chain B (e.g., selling it). Failure of this coordination results in failed bundles and lost bids.

These are the platforms and protocols that facilitate the auction mechanism itself. Examples include Chainscore for cross-chain intent auctions or Flashbots SUAVE for a decentralized block-building network. They provide the software, order flow aggregation, and settlement guarantees that connect searchers with block producers, often using commit-reveal schemes to prevent frontrunning within the auction.

End-users and dApps are indirect participants. While they don't bid in auctions, their transactions are the source of MEV opportunities. Users benefit from potentially better execution prices if searchers compete to close arbitrage gaps. However, they also face risks like censorship if their transactions are not included in profitable blocks, or increased base fee volatility due to bidding wars.

The auction creates a price discovery mechanism for cross-chain block space. The process is:

• A searcher detects a cross-chain arbitrage opportunity.
• They calculate a maximum bid price (their expected profit).
• They submit a bid and a cryptographically committed transaction bundle to an auction.
• The winning bid's bundle is executed atomically across the involved chains.
• The validator receives the bid payment, and the searcher claims the arbitrage profit.