Private order flow refers to trade orders executed directly between two parties or through a broker-dealer without routing through a public exchange. These transactions are often arranged to achieve better pricing or larger block trades with minimal market impact. The specifics of private order flow can be opaque, raising questions about market fairness and transparency. It represents a significant portion of trading volume in traditional markets.
Context
In the context of digital assets, private order flow is a topic of increasing discussion, particularly as institutional participation grows. News reports sometimes address concerns about market fragmentation and the potential for information asymmetry when large trades occur off public cryptocurrency exchanges. The debate often centers on how private order flow might influence price discovery and overall market liquidity in a less regulated environment.
PROF introduces an incentive-compatible mechanism that enforces private transaction ordering within PBS, mitigating harmful MEV while preserving validator profitability.
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