Searcher Competition in Block Building
Akaki Mamageishvili, Christoph Schlegel, Benny Sudakov, Danning Sui

TL;DR
This paper analyzes how searcher competition affects the maximum value validators can extract in blockchain markets, providing theoretical insights and empirical validation for value distribution among participants.
Contribution
It introduces a core-based solution framework to predict validator and searcher value shares, and characterizes mechanisms for optimal value allocation in blockchain block building.
Findings
Validators extract more value with increased searcher competition.
Mechanisms can ensure searchers receive their marginal contributions.
Empirical data shows a positive correlation between search activity and validator value capture.
Abstract
We study the amount of maximal extractable value (MEV) captured by validators, as a function of searcher competition, in blockchains with competitive block building markets such as Ethereum. We argue that the core is a suitable solution concept in this context that makes robust predictions that are independent of implementation details or specific mechanisms chosen. We characterize how much value validators extract in the core and quantify the surplus share of validators as a function of searcher competition. Searchers can obtain at most the marginal value increase of the winning block relative to the best block that can be built without their bundles. Dually this gives a lower bound on the value extracted by the validator. If arbitrages are easy to find and many searchers find similar bundles, the validator gets paid all value almost surely, while searchers can capture most value if…
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