Imperfect Commitment in Maximal Extractable Value Auctions
Aleksei Adadurov, Sergey Barseghyan, Anton Chtepine, Antero Eloranta, Andrei Sebyakin, Arsenii Valitov

TL;DR
This paper analyzes the commitment problem in Ethereum MEV auctions, modeling builder defection behavior and its impact on auction outcomes, with empirical estimates from real data.
Contribution
It introduces a model of builder defection in MEV auctions, quantifies its effects, and provides empirical estimates using the libmev dataset.
Findings
Sandwich opportunities are highly competitive.
Naked arbitrage and liquidations are more susceptible to builder defection.
Effective MEV auctions require both format and constraints on builder behavior.
Abstract
Ethereum block builders run sealed auctions among searchers, but nothing in the protocol forces a builder to honor the auction outcome after observing submitted bundles. This paper studies the commitment problem. We model a builder who defects with probability and, upon defection, replicates a type-specific fraction of the winning MEV opportunity. Searchers anticipate this behavior and choose between a risky first-price bid and a safe deterrence bid that makes frontrunning unprofitable. The resulting equilibrium is piecewise, with the cost of imperfect commitment depending jointly on replicability and competition. Using the \texttt{libmev} dataset, we estimate from right-tail bribe plateaus and decompose observed auction revenue against the surplus a defecting builder could capture. The results show sharp heterogeneity across MEV types:…
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