Transaction Processing

Transaction Visualization

A Simple Overview

a

b

c

d

e

f

g

The reality is more complicated

Consequence 1: Extract Value from Users

Consequence 2: Excess Gas Prices ("Priority Gas Auctions")

• may raise costs for all users without economic benefit
• wastes blockspace
• slows down processing

Proposer-Builder-Separation (PBS)

a

b

e

f

g

Some data on pools, MEV Boost, and income

• MEV significant part of proposer income
• MEV-boost/PBS protocols widely used
• concentration in
  • pools
  • relays
  • builders

Restaking

Flashbots Protocol

Idea of Flashbots

• separate user roles
  • builders/seekers
  • relay
  • miners/validators
• eliminate public mempool
• reserve top of blockspace for privately submitted transactions

Illustration

Transactions Send to Searchers

NB: the relay is a security measure: it has high capacity and can distinguish garbage from real transactions

Bundles come to Miners

NB: miners could still manipulate, front-run etc, but Flashbots monitors them and would cut them off if they misbehave

Is it used?

81% of validators have signed on with Flashbots (>880,000 total)

Does Flashbots Prevent MEV?

• Flashbots "democratizes" MEV
• prevents priority gas auctions

Flashbot 3.0 Transaction Privacy

• under development (as of 2023)
• Idea: 
  • submit encrypted transactions
  • block building based on gas but not content
  • decryption only occurs at processing
• But: very tricky problem in a trustless world