Exclusive orderflow refers to a situation where a specific entity, such as a block builder or market maker, receives a stream of transaction orders before other market participants. This privileged access allows the entity to process or include these orders with priority. It can grant a significant informational or execution advantage.
Context
The concept of exclusive orderflow is highly contentious in blockchain ecosystems, particularly concerning Maximal Extractable Value (MEV) extraction. Critics argue it leads to market unfairness and centralization, as only a few participants benefit from early access. Solutions like encrypted mempools or orderflow auctions are being explored to democratize access and reduce its negative impacts.
A game-theoretic model formalizes MEV-Boost auctions, demonstrating how latency and strategic bidding, not maximal value, drive block selection, quantifying auction inefficiency.
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