Cross-Chain MEV Supply Chain

Builders assemble transaction bundles from searchers into blocks that are valid across multiple chains. They must coordinate with relays and sequencers on different networks (e.g., Ethereum, Arbitrum, Polygon) to ensure atomicity. Their role is critical for executing complex strategies like cross-domain arbitrage that require synchronized state changes.

Relays are trusted entities that forward blocks or messages between chains. In cross-chain MEV, they ensure the proposer on the destination chain receives the bundled transaction. Validators/Proposers on each chain (e.g., Ethereum consensus layer, Cosmos zones) are the final actors who include the cross-chain bundle, collecting the MEV share. Their coordination is managed by protocols like Chainlink CCIP or native bridge architectures.

The core technical challenge is atomic execution: ensuring a transaction succeeds on all chains or fails on all chains. Solutions include:

• Hash Time-Locked Contracts (HTLCs)
• Specialized MEV-aware bridges with rollback capabilities
• Optimistic verification systems

Failure to achieve atomicity can lead to significant losses, making secure interoperability protocols a non-negotiable component.

Cross-chain MEV introduces new economic and security dynamics:

• Revenue Leakage: MEV can be extracted as value moves between chains.
• Increased Attack Surface: Bridges and relays become high-value targets for sandwich attacks and reorg attacks.
• Validator Centralization Risk: Profitable cross-chain MEV may incentivize validator cartels that control multiple chains, threatening decentralization.

This strategy exploits price differences for the same asset (e.g., ETH, USDC) across different blockchains. A searcher buys the asset on a chain where it's cheaper and atomically sells it on a chain where it's more expensive via a cross-chain bridge or DEX aggregator.

• Example: Buying WETH on Avalanche and selling it for a higher price on Arbitrum within a single atomic transaction bundle.
• Key Enablers: Fast bridging protocols (e.g., Stargate, Across) and cross-chain liquidity pools.

Searchers monitor lending protocols (like Aave, Compound) across multiple chains to identify undercollateralized positions. They trigger a liquidation on one chain and use the proceeds to perform related actions on another chain within the same atomic execution.

• Cross-Chain Aspect: Profits from a liquidation on Polygon might be instantly deployed as liquidity on Optimism to capture additional yield.
• Requires: Real-time monitoring of collateral health across chains and fast cross-chain message passing.

This involves buying an NFT on one blockchain marketplace and selling it on another where it commands a higher price, factoring in bridging costs and gas. Strategies often focus on blue-chip collections that exist on multiple chains (e.g., Pudgy Penguins on Ethereum and Layer 2s).

• Complexity: Must account for NFT bridging time and potential loss of provenance. Atomic execution is challenging.
• Tools: Specialized cross-chain NFT marketplaces and indexers.

A sophisticated and often malicious strategy where an attacker exploits the latency or design of a cross-chain bridge or oracle to profit. This can involve manipulating the asset price on a source chain before a bridge finalizes a transfer, or exploiting oracle price feeds that update with delay across chains.

• Example: The Nomad Bridge hack involved manipulating the bridge's message verification process.
• Defense: Bridges use fraud proofs, multi-sigs, and optimistic verification periods to mitigate this.

A variant of Just-in-Time (JIT) liquidity provision extended across chains. A searcher provides a large amount of liquidity to a pool on one chain to facilitate a cross-chain swap at a favorable rate, then immediately removes the liquidity after collecting fees and arbitrage profit.

• Process: 1) Bridge assets to target chain, 2) Provide JIT liquidity for an incoming large swap, 3) Collect fees, 4) Remove liquidity and bridge profits back.
• Risk: High gas costs and impermanent loss must be outweighed by swap fees and arbitrage gains.

This is an infrastructural strategy, not a direct profit one. Proposer-Builder Separation (PBS) and interchain schedulers like Chainscore coordinate block production and MEV extraction across multiple blockchains. They allow builders to construct blocks that include profitable cross-chain bundles, ensuring atomicity and maximizing validator revenue.

• Function: Acts as a coordination layer, matching cross-chain intent with execution capacity.
• Goal: Democratize access to cross-chain MEV and reduce its negative externalities like chain congestion.

The liveness of the cross-chain MEV supply chain is critical. If relayers or searchers go offline or are censored, user transactions can be indefinitely delayed or dropped, leading to financial loss. This creates a liveness-fault liability for operators. Furthermore, validator-level censorship on either the source or destination chain can block the inclusion of entire cross-chain MEV bundles.

The profit distribution in the cross-chain MEV supply chain—between searchers, builders, relayers, and validators—can lead to incentive misalignment. Key risks include:

• Extraction races that waste resources and increase gas costs.
• Bribe attacks where validators are incentivized to deviate from protocol rules.
• Value leakage where MEV profits are not shared with the underlying chain's security (e.g., via block rewards or fees).

Cross-chain MEV strategies frequently depend on price oracles and state attestations to identify arbitrage opportunities. This creates a data integrity risk. An attacker who can manipulate the oracle price feed on one chain (e.g., via a flash loan) can trigger a fraudulent arbitrage signal, causing the cross-chain MEV system to execute unprofitable or malicious trades across chains.

The composability of cross-chain MEV contracts increases attack surface. Vulnerabilities in a single component—such as a bridge contract, a liquidity pool, or a searcher's bundle contract—can be exploited across chains. This leads to amplified losses and complicates incident response, as funds may be scattered across multiple networks with different governance and upgrade processes.