What Is the Difference between a Private Mempool and an Encrypted Mempool?
A private mempool relies on trust; transactions are sent unencrypted to a trusted third party (a relay or builder) who promises not to reveal them. An encrypted mempool is a trustless system where transactions are encrypted before being submitted to a public pool.
Validators can see the encrypted transactions but cannot decrypt their contents (like the amount or destination) until they are committed to a block. This prevents MEV extraction based on transaction content while removing the need to trust a centralized relay.
Glossar
Encrypted Mempool
Anonymity ⎊ The encrypted mempool represents a critical evolution in transaction privacy within cryptocurrency networks, functioning as a shielded holding area for unconfirmed transactions before block inclusion.
MEV Extraction
Extraction ⎊ Within cryptocurrency markets, particularly concerning options trading and financial derivatives, extraction denotes the opportunistic capture of value arising from predictable transaction ordering vulnerabilities within blockchain networks.
Encrypted Transactions
Ledger ⎊ Encrypted transactions, within the convergence of cryptocurrency, options trading, and financial derivatives, represent a fundamental shift towards enhanced data integrity and operational resilience.
Private Mempool
Propagation ⎊ The private mempool represents a localized, unconfirmed transaction pool maintained by individual nodes within a cryptocurrency network, distinct from the globally broadcasted public mempool.
Mempool
Propagation ⎊ The mempool, within cryptocurrency networks, functions as a temporary holding area for unconfirmed transactions awaiting inclusion in a block.