Cross-Chain Encrypted Mempool

The system's security relies on Threshold Signature Schemes (TSS) or Homomorphic Encryption. Transactions are encrypted before being broadcast to a decentralized network of relayers or sequencers. A pre-defined quorum of these nodes must collaborate to decrypt the transaction, which only occurs at the moment of block inclusion. This prevents any single entity from seeing the plaintext transaction content in advance.

• Key Result: Creates a dark pool for cross-chain intents, eliminating MEV extraction opportunities like front-running and sandwich attacks on the bridging path.

Execution relies on a permissionless or permissioned set of relayer nodes that form the communication backbone. These nodes:

• Receive encrypted transaction bundles (blobs or intents).
• Propagate them to destination chain sequencers or validators.
• Participate in the threshold decryption protocol.
• Are often incentivized via protocol fees and slashing conditions for liveness failures.

This architecture ensures censorship resistance and liveness, as the system doesn't depend on a single centralized operator.

A primary application is protecting users performing large cross-chain swaps (e.g., Ethereum to Solana). Without encryption, arbitrage bots can see the pending swap on the source chain and front-run the corresponding trade on the destination DEX, degrading user price execution.

An encrypted mempool keeps the swap details secret until the moment it is settled atomically across chains, guaranteeing the user receives the expected output without slippage from predatory MEV.

Cross-chain encrypted mempools are a natural fit for intent-centric protocols. Users submit signed declarations of their desired outcome (e.g., "I want X token on Arbitrum for Y ETH on Base") rather than explicit step-by-step transactions.

Solvers compete off-chain to find the best execution path for these intents. The encrypted mempool allows solvers to receive and process these intents without leaking their strategy, leading to better pricing and efficiency for the end-user.

Implementing this technology involves significant complexity and trade-offs:

• Latency: Threshold decryption adds a computational delay, potentially impacting time-sensitive transactions.
• Relayer Incentives: Designing robust cryptoeconomic incentives to ensure honest and timely relaying is non-trivial.
• Interoperability: Requires standardized encryption schemes and light client verification across heterogeneous chains.
• Centralization Pressure: The need for high-performance, always-online relayers may lead to node centralization over time.

The relayer network that transmits encrypted transactions between chains becomes a critical trust point. Malicious or compromised relayers can:

• Censor transactions by selectively dropping them.
• Perform traffic analysis to infer transaction relationships based on timing and size, even without decryption.
• Front-run by observing the decryption event on the destination chain and submitting a competing transaction.

The security of the entire system depends on the threshold decryption process. Key challenges include:

• Oracle centralization: If the decryption oracle is a single entity or a small committee, it becomes a high-value attack target.
• Key generation ceremony: A flawed Distributed Key Generation (DKG) ceremony can compromise keys from inception.
• Live key refresh: The protocol must support secure, live rotation of decryption keys without disrupting pending transactions.

Encryption does not eliminate Maximal Extractable Value (MEV); it transforms and potentially concentrates it. New risks include:

• Oracle MEV: Entities controlling the decryption oracle gain a privileged view and can extract value.
• Cross-chain arbitrage bundles: Sophisticated searchers may attempt to construct arbitrage strategies that span both the source and destination chains, creating complex, hard-to-analyze economic attacks.

The complexity of the cryptographic stack introduces severe implementation risks:

• Side-channel attacks on the decryption oracle's hardware.
• Ciphertext malleability allowing transaction alteration before decryption.
• Integration bugs between the encryption layer, relayer logic, and destination chain's consensus and execution client.

Encrypted mempools create legal and operational gray areas:

• Travel Rule compliance: Financial regulations requiring identification of transaction parties may be incompatible with strong encryption.
• Chain-of-custody: For institutional users, proving the integrity and origin of a transaction before it is publicly recorded becomes challenging.
• Blacklisting difficulty: Preventing transactions to sanctioned addresses is nearly impossible if the destination is hidden until execution.

Attackers may target the network layer of the relayer system or the destination chain:

• Eclipse attacks on individual validators or the decryption oracle to isolate them and manipulate the view of pending transactions.
• Denial-of-Service (DoS) attacks on relayers to block the cross-chain transaction pipeline.
• Timing attacks that exploit the deterministic delay between encryption on the source chain and decryption on the destination chain.

A mempool is a node's temporary storage for unconfirmed transactions broadcast to a network. It's a critical component for transaction ordering and block production. Key functions include:

• Transaction Validation: Nodes verify signatures and check for double-spends.
• Fee Market: Users compete by attaching fees, creating a dynamic pricing layer.
• Block Builder Source: Validators or sequencers select transactions from the mempool to include in the next block.

Threshold Encryption is a cryptographic scheme where a transaction is encrypted with a public key, and the corresponding private key is split among a group of validators. The transaction can only be decrypted and revealed when a predefined threshold (e.g., 2/3) of participants collaborate. This is the core privacy mechanism in encrypted mempools, preventing front-running and MEV extraction by keeping transaction details hidden until inclusion in a block.

A Cross-Chain Interoperability Protocol enables communication and value transfer between independent blockchains. When integrated with an encrypted mempool, it allows a private transaction intent initiated on one chain to be securely routed and fulfilled on another. Examples include bridges, inter-blockchain communication (IBC), and atomic swap protocols. This creates a unified, private liquidity layer across ecosystems.

MEV refers to profit that can be extracted by reordering, including, or censoring transactions within a block. A traditional, public mempool exposes transaction flow, enabling MEV strategies like front-running and sandwich attacks. An encrypted mempool is a primary defense, obfuscating transaction details until they are committed, thereby protecting users and democratizing block-building rewards.

A Shared Sequencer is a decentralized network that orders transactions for multiple rollups or modular chains. It acts as a neutral, common mempool and execution layer. When combined with threshold encryption, it becomes a Cross-Chain Encrypted Mempool, providing transaction privacy and fair ordering across an entire ecosystem of connected chains, reducing fragmentation and improving user experience.

An Intent-Based Architecture shifts the transaction paradigm from specifying exact execution paths (e.g., swap X for Y on DEX Z) to declaring a desired outcome (e.g., get the best price for X). Encrypted mempools are a natural fit, as users can privately broadcast their intents. Solvers then compete to discover the optimal cross-chain execution path, with the winning solution revealed only upon successful, private fulfillment.