How Does the “Sealed Bid Auction” Mechanism in Flashbots Work?

The sealed bid auction mechanism in Flashbots allows searchers to submit their MEV bundles and their payment (bid) privately to the block builder. The bid is "sealed" because the details are not publicly visible, preventing other searchers from front-running the bundle itself.

The block builder selects the bundle that offers the highest total payment (gas fee plus tip) to the validator. Only the winning bundle is included in the block, and the payment is made, ensuring the most profitable transaction order is executed privately and fairly among the searchers.