If roles between producer and sequencer are split; why not give block producers a double role? 1) Sequencer: ordering the transactions from the previous block based on hash ordering (with some data from the current block. E.g. pub key); 2) Selector: selecting transactions for the next block.
To the selector the final ordering of transactions appears to be unpredictable and random. The sequencer has only the possibility to drop the last transactions if they exceed block gas and has no possibility to insert/replace orders. The sequencer can only execute a predefined hash order and does therefore not have an arbitrary impact on the order.
Please let me know if such a method has already been proposed (and rejected).
Thereâs another big problem with the auction. It hugely favours whales over small holders.
Letâs say a whale wants to sell 1000 ETH and 1000 small holders want to buy 1 ETH each. The auction is worth 5% of volume in slippage avoided to whoever wins it.
So to the whale it is worth paying up to 50 ETH to win the auction. To each of the small holders it is worth only 0.05 ETH.
So the whale wins hands down each time, and is able to trade perfectly against the order flow of smaller participants, however sophisticated they are.
This is horrible. It doesnât make any difference how charitably the auction money is spent, the little guy is getting ripped off.
Remember the point of Flashboys was that until it was banned, big players were able to pay to see and react to orders before retail who could never afford the privilege. This is exactly what is being proposed here.
Update: The term MEV Auctions now has another meaning which is auctions held by miners to determine transaction ordering. This is very different from what is described in this post.