The Transaction Ordering Game describes the strategic competition among network participants, such as validators or block builders, to determine the sequence in which transactions are included within a blockchain block. This competition arises because the order of transactions can significantly affect their outcomes, particularly in decentralized finance applications where front-running or arbitrage opportunities exist. Participants employ various strategies to optimize their transaction placement for economic advantage. This game highlights the economic incentives tied to block construction.
Context
Discussions around the Transaction Ordering Game are central to understanding maximal extractable value and its implications for network fairness and decentralization. Solutions like proposer-builder separation and various mempool designs aim to mitigate the negative effects of this game by distributing power over transaction ordering. News reports frequently analyze the economic incentives and technological approaches used by different actors to gain an advantage in this competitive environment.
A novel agent-based simulation models the two-sided PBS market, revealing a dynamic equilibrium between builders and searchers based on transaction conflict probability.
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