Cross-Domain MEV

The core technical enabler of CDMEV is the ability to execute a bundle of transactions atomically across multiple blockchains. This means the entire sequence either succeeds on all chains or fails on all chains, eliminating execution risk. This is achieved through protocols like Chainlink CCIP, Across, or LayerZero, which provide cross-chain messaging with execution guarantees.

• Example: A searcher can arbitrage a price discrepancy between ETH/USDC on Ethereum and SOL/USDC on Solana in a single, risk-free operation.

CDMEV dramatically increases the potential value extraction landscape by combining liquidity and state from separate domains. Searchers are no longer constrained to opportunities within a single chain.

• Arbitrage: Exploiting price differences for the same asset (e.g., ETH) on an L1, an L2, and an appchain.
• Liquidations: Triggering a liquidation on Chain A by rebalancing collateral from Chain B.
• Cross-Domain NFT Minting: Bundling a mint on one chain with an instant listing or loan on another.

CDMEV strategies are fundamentally dependent on the security, latency, and cost structure of the cross-chain messaging layer or bridge they utilize. The relayer network becomes a critical piece of infrastructure, as its liveness and censorship resistance directly impact MEV extraction.

• Risk: A malicious or slow relayer can cause bundle failure or frontrunning.
• Fee Markets: Relay fees become a new variable in the MEV profit equation, competing with traditional gas costs.

Executing CDMEV requires coordination between entities that control block production on different chains. A searcher must submit bundles to builders or proposers on each target domain, who must then cooperate to ensure atomic inclusion.

• Challenges: Aligning block times, dealing with non-collaborative builders, and managing asynchronous finality across chains.
• Emerging Solutions: Specialized cross-domain block builders and shared sequencing layers aim to streamline this process.

CDMEV introduces novel attack surfaces that differ from single-chain MEV. The interdependency between chains can be exploited.

• Cross-Domain Reorgs: An attacker might attempt to reorg a chain to invalidate a settled transaction on a connected chain, breaking atomicity.
• Oracle Manipulation: Many bridges rely on oracles; manipulating their price feeds can create artificial arbitrage opportunities or trigger undesired liquidations across domains.

Value extracted via CDMEV has economic and governance consequences that spill over domain boundaries. Fees and captured value flow across ecosystems, influencing tokenomics and stakeholder incentives.

• Example: MEV profits from an L2 strategy may be captured and paid out in the native token of the connecting bridge protocol.
• Governance: Decisions made by a DAO governing a cross-chain protocol (e.g., a bridge) can directly enable or suppress certain CDMEV strategies, linking governance power to extractable value.

A searcher liquidates an undercollateralized position on one domain by repaying debt using assets bridged from another domain where they are cheaper or more accessible.

• Requires monitoring collateralization ratios across domains connected by lending protocols (e.g., Aave on multiple chains).
• The profit is the liquidation bonus, minus bridging costs and gas.
• This pattern highlights the interconnected risk of cross-chain DeFi lego.

Capitalizing on valuation differences for NFTs or NFT collections across marketplaces on different chains.

• Involves bridging NFTs (often via wrapped representations) or purchasing on a chain where the NFT is undervalued to sell where it is overvalued.
• Highly dependent on the liquidity and accuracy of cross-chain NFT price oracles.
• Can include exploiting minting mechanics or airdrop eligibility across domains.

Extending classic Automated Market Maker (AMM) MEV to a multi-chain environment.

• JIT Liquidity: A searcher provides liquidity in a pool on one chain just before a large cross-chain swap arrives (detected via mempool or intent), capturing fees, and removes it immediately after.
• Cross-Domain Sandwiching: Front-running and back-running a user's cross-chain swap by manipulating prices on the source and destination AMMs.

Exploiting the latency or source diversity in oracle networks that feed price data to multiple domains.

• A searcher could manipulate a price on a chain with a vulnerable oracle, trigger derivative contracts (like options or perpetuals) on that chain, and take offsetting positions on another chain with accurate prices.
• This pattern targets the consistency lags in cross-domain oracle state updates.

This is the fundamental profit source, exploiting price differences for the same asset on different chains. Arbitrageurs use fast, atomic transactions to buy low on one domain and sell high on another. Key components include:

• Bridges & Messaging Protocols: Fast, reliable asset transfer (e.g., Across, Wormhole).
• Cross-Chain Searchers: Bots that monitor multiple mempools for opportunities.
• Atomic Composability: Ensuring the entire trade sequence succeeds or fails together to avoid risk.

Specialized entities have emerged to capture cross-domain MEV. Cross-domain searchers run complex algorithms across multiple chains' mempools. Cross-domain builders construct bundles that include transactions on a source chain (e.g., Ethereum) with dependent actions on a destination chain (e.g., Arbitrum), submitting them to validators or sequencers on both sides. This requires sophisticated coordination and access to fast execution environments on each domain.

Cross-Domain MEV has significant systemic effects:

• Improved Liquidity Efficiency: Arbitrage helps align prices across domains, reducing fragmentation.
• New Centralization Vectors: Requires capital, speed, and sophisticated infrastructure, potentially favoring large players.
• Cross-Domain Sandwich Attacks: Possible if an attacker can front-run a bridge transaction on both the source and destination chain.
• Increased Complexity for Users: Failed cross-domain transactions can leave users with funds stuck in intermediate states.

Intents are declarative statements of a user's desired outcome (e.g., 'I want the best price for 100 ETH on any L2'). Solvers compete to fulfill these intents across domains, often using cross-domain MEV strategies to find optimal execution paths. This shifts the complexity from the user to the solver network and is a key architectural shift in cross-chain UX, with protocols like Cow Swap and UniswapX pioneering this approach.

The field is rapidly evolving with open challenges:

• Atomicity Guarantees: Ensuring transaction success across multiple, independently secured domains.
• Fair Sequencing: Preventing malicious reordering in cross-domain contexts.
• MEV-Aware Bridge Design: Building bridges that are resilient to extraction and don't create new attack surfaces.
• Shared Sequencing: Layer 2 rollups using a common sequencer set could internalize cross-rollup MEV, changing the landscape.