Private MEV Protection RPCs: Benchmark Stud

TL;DR

This paper examines the rise of private RPCs in Ethereum's DeFi ecosystem, analyzing how their use of Order Flow Auctions impacts transaction efficiency and execution quality amid new protocol changes.

Contribution

It provides a detailed benchmark study of private RPCs and their OFA strategies, highlighting the implications of design choices on transaction outcomes.

Findings

Not all OFAs produce the same results.

OFAs significantly influence transaction efficiency.

RPC design choices impact execution quality.

Abstract

Decentralized Finance (DeFi) on Ethereum has undergone significant transformations since its emergence during the DeFi summer of 2020. With the introduction of Proof of Stake (PoS) and Proposer-Builder Separation (PBS), the transaction supply chain on Ethereum has shifted from relying entirely on the public mempool for DeFi interactions to an astonishing 80% usage of private RPCs. These private RPCs submit transactions directly to builders, skipping the public mempool, while conducting Order Flow Auctions (OFAs) to capture MEV backrun rebates and gas rebates. Our findings reveal that not all RPCs OFAs produce the same outcomes. These insights underscore the significant implications of OFA design choices on transaction efficiency and execution quality, and thus why an order flow originators should pay close attention to which OFA they use.