Briefing
The fundamental challenge of Maximal Extractable Value (MEV) exploitation, particularly its institutionalization within the Proposer-Builder Separation (PBS) architecture, poses a significant systemic risk to the stability and fairness of decentralized finance. This research introduces PROF (PRotected Order Flow), a novel system designed to limit adversarial MEV by enforcing a strict, private ordering on transaction bundles while simultaneously aligning incentives for block producers. PROF achieves this by ensuring that the inclusion of these protected bundles is incrementally profitable for the proposer, thereby bypassing competitive latency races and guaranteeing timely inclusion. The most important implication is the restoration of transaction execution quality for users, as PROF-Share, an enhanced version, redirects all backrunning profits back to the users, fundamentally restructuring the economics of order flow extraction.
Context
The prevailing architectural solution to MEV, Proposer-Builder Separation (PBS), was established to decentralize block production and mitigate some forms of centralized extraction. However, PBS inadvertently institutionalized a form of adversarial MEV, creating an opaque market where transaction-order manipulation, such as sandwich attacks and front-running, remains prevalent. The foundational problem is a lack of a strong, verifiable chain of custody for user transactions combined with a competitive mechanism that forces users into a “latency racing” environment. This systemic flaw compromises the integrity of the transaction ordering process, leading to a direct and quantifiable loss for end-users and increasing the risk of centralization among builders.
Analysis
PROF introduces a new mechanism that operates concurrently with the existing PBS framework, functioning as a protected channel for user order flow. The core logic relies on two primitives → enforced ordering and incentive alignment. First, users submit transactions in a “bundle” to a PROF sequencer, which imposes a specific, verifiable ordering and keeps the transaction contents private. This privacy is maintained until the block proposer commits to the bundle’s inclusion, establishing a strong cryptographic chain of custody that prevents transaction-order manipulation by intermediate entities.
Second, the mechanism is designed to make the PROF bundle inclusion incrementally profitable, ensuring proposers are incentivized to include it alongside the winning PBS block. PROF is compatible with any ordering policy, including first-come, first-serve, and fundamentally differs from previous solutions by decoupling the protection mechanism from the block-building competition, securing the transaction order before it enters the block auction.
Parameters
- Inclusion Likelihood → High inclusion likelihood for minimal fee → PROF transactions bypass the competition in the standard PBS auction, which ensures timely inclusion even with low fees.
- Latency Impact → Minimal → Empirical analysis confirms the impact of enrichment (bundle merging) latency on transaction inclusion likelihood is negligible.
- Backrunning Profit Return → 100% to users → The PROF-Share enhancement conducts the backrunning auction solely for the benefit of the users, ensuring they retain all extracted value.
- Trust Assumption → Zero additional trust → The system requires no new trust assumptions among the existing Proposer-Builder Separation entities.
Outlook
This research opens a critical new avenue for mechanism design by demonstrating that adversarial MEV can be mitigated through incentive-aligned, backward-compatible architectural layers, rather than requiring a complete overhaul of the consensus protocol. In the next three to five years, PROF or its derivatives could become a standardized, default layer for order flow submission, leading to a measurable improvement in transaction execution quality across major Layer 1 and Layer 2 ecosystems. The work establishes a clear path for the smooth adoption of temporal fair ordering policies by eliminating the negative externality of latency racing, setting a new benchmark for cryptoeconomic security and user protection in decentralized exchange environments.
