Economic Mechanism Design Redefines Blockchain Scalability beyond Technical Throughput ∞ Research

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Briefing

The prevailing blockchain scalability discourse, focused on technical throughput, overlooks Maximal Extractable Value (MEV) spam as a primary economic impediment, where profit-seeking bots consume significant blockspace and negate scaling gains. This research introduces a new MEV auction mechanism, integrating programmable privacy and explicit bidding for transaction ordering, fundamentally shifting the focus from raw technical capacity to effective user throughput. This theoretical re-framing establishes economic mechanism design as an indispensable component for architecting high-throughput, user-centric decentralized systems, promising more equitable and efficient on-chain environments.

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Context

Prior to this work, blockchain scalability discussions predominantly revolved around technical solutions like sharding and rollups, alongside the acknowledged “scalability trilemma” balancing decentralization, security, and raw throughput. The foundational problem unaddressed was the economic incentive structure of MEV searchers, whose “spam auctions” effectively consume newly available blockspace, thereby preventing technical scaling advancements from translating into tangible benefits for end-users, such as reduced fees and faster transactions.

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Analysis

This research re-evaluates blockchain scalability, asserting that economic forces, specifically Maximal Extractable Value (MEV), are the dominant bottleneck. The core mechanism addresses profit-seeking bots that create “spam auctions” by submitting numerous low-value transactions to secure arbitrage, paradoxically consuming substantial network capacity. The proposed solution introduces a two-pronged approach ∞ programmable privacy, which restricts MEV searchers’ information access (e.g. allowing only backrunning), and explicit bidding for transaction ordering. This fundamentally differs from previous approaches by replacing implicit, gas-intensive competition with a transparent, economically designed mechanism to optimize blockspace allocation and user experience.

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Parameters

Core Thesis ∞ MEV is the dominant limit to scaling blockchains
Key Data Point 1 ∞ MEV bots consume 40% of blockspace on Solana
Key Data Point 2 ∞ Spam bots consume >50% gas, pay <10% fees on OP-Stack rollups
Proposed Solution ∞ Programmable privacy and explicit MEV auctions
Key Authors ∞ Robert Miller (Flashbots Steward)

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Outlook

This research opens critical new avenues for protocol design, urging the academic community to integrate economic mechanism design more deeply with established cryptographic and distributed systems theories. Over the next three to five years, this theory could unlock real-world applications, enabling truly scalable blockchains characterized by lower, more predictable transaction fees and significantly enhanced user experience. The strategic shift towards explicit MEV markets and programmable privacy will fundamentally alter how blockspace is allocated and valued, fostering a more equitable and efficient on-chain environment.

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Verdict

This research fundamentally re-frames blockchain scalability, establishing economic mechanism design as an indispensable principle for realizing the future of high-throughput, user-centric decentralized systems.

Signal Acquired from ∞ Incrypthos