How Does Back-Running Work with Encrypted Mempools?

Transcript

Guys, uh, I'm Zach. Thanks for the talk. Um, I had a question about back running and, um, cuz like you're saying, back running is is just arbitrage and generally a good thing. Um, so is all the back running pushed into the next block or are there ways or ideas of how to let people back run in a single block? Not not all back running but the back running of those encrypted transactions would happen immediately afterwards.

Yeah. So uh yeah does that answer your question? >> Yeah. So, so no block, no back running in the same block, right? And then are there all the Oh, maybe something we forgot to mention is all this just optional, right? So all you you would still have unencrypted transactions, encrypted transactions and unencrypted transactions. So um that's just a new transaction type. the encrypted transaction is just a new transaction type and of the and the backgrounding of those transaction would happen in yeah at the top after the top of the next block.

Uh, are there ways to let people back run in the same block or um has anyone think thinking about how to let people back around immediately after trades and stuff or just >> uh do you mean for the encrypted transactions? Because that's that's kind of like not possible, right? Because they're not even revealed at this time, right? They're just revealed at the top of the next block. So that's when and the builder who builds the next block just has then the ability to extract the the back running there.

>> Okay, cool. Yeah, that's all. Thanks. Yeah, there's um I think um there is a really interesting deeper conversation there to to be had to how exactly it is extracted and essentially I would say the problem one problem that the current designs have is and I touch on try to touch on this on in the slides that it's basically just one big transaction that you do after the encrypt transactions and that back runs all of them. So whereas currently every individual transaction gets back run in the private me pools. So arguably the

depending on how you view like from a system perspective the one transaction is more efficient because don't need to do thousands of little intractions but from a trading perspective the individual backgrounding is more efficient because everyone kind of gets background and everyone can get paid back. So if you also have this assumption that really like always everyone gets paid back the users then then I think there's a good case to be made that the the the private me back running is more efficient. That's why I said like ideally we have a design where the same level of back running efficiency and the per transaction back running is reintroduced to um to it but but I think we don't have that currently

but I think this is conceptually possible.