Does MEV Mitigation through Private Pools Compromise the Decentralization Ethos of a Blockchain?
Some argue that private transaction pools compromise decentralization because they introduce a trusted intermediary (the block builder/relay) that controls the ordering and inclusion of transactions, potentially leading to censorship or centralized control over the block-building process. This contrasts with the fully transparent and permissionless nature of the public mempool.
Glossar
Private Transaction Pools
Anonymity ⎊ Private transaction pools represent a mechanism for obscuring the direct on-chain link between transacting parties, particularly relevant within decentralized finance and cryptocurrency derivatives.
Private Pools
Context ⎊ Private Pools, in the context of cryptocurrency mining, are permissioned groups where membership and participation are restricted, often by invitation or specific qualification criteria, contrasting with public pools.
MEV Mitigation
Strategy ⎊ MEV Mitigation involves implementing protocol designs and off-chain coordination mechanisms intended to reduce or redistribute the economic value captured through transaction ordering manipulation, aiming to restore fairness to the block construction process.
Compromise
Resolution ⎊ Compromise in this context refers to the negotiated settlement or agreement reached between two or more parties to resolve a dispute, often concerning the terms of a derivative contract or a governance proposal within a decentralized autonomous organization.
Decentralization Ethos
Autonomy ⎊ Decentralization ethos within cryptocurrency, options trading, and financial derivatives represents a shift in control from centralized intermediaries to distributed networks, impacting market microstructure through reduced counterparty risk and increased operational resilience.