PROF: Protected Order Flow in a Profit-Seeking World

TL;DR

The paper addresses pervasive MEV risks in DeFi under the Proposer-Builder Separation framework by introducing PROF, a protected order-flow system that privately sequences and merges a bundle of user transactions into the next block. PROF preserves compatibility with existing PBS architectures, allows arbitrary internal ordering policies, and uses trusted execution environments to maintain privacy while ensuring high inclusion likelihood. An enhanced variant, PROF-Share, redistributes backrunning profits to users, improving execution outcomes relative to MEV-Share under typical market conditions. The authors provide a rigorous economic analysis, an end-to-end implementation, latency benchmarks, and real-world data validation, demonstrating PROF’s practicality and potential to reduce MEV harms without sacrificing throughput or trust assumptions.

Abstract

Users of decentralized finance (DeFi) applications face significant risks from adversarial actions that manipulate the order of transactions to extract value from users. Such actions -- an adversarial form of what is called maximal-extractable value (MEV) -- impact both individual outcomes and the stability of the DeFi ecosystem. MEV exploitation, moreover, is being institutionalized through an architectural paradigm known Proposer-Builder Separation (PBS). This work introduces a system called PROF (PRotected Order Flow) that is designed to limit harmful forms of MEV in existing PBS systems. PROF aims at this goal using two ideas. First, PROF imposes an ordering on a set ("bundle") of privately input transactions and enforces that ordering all the way through to block production -- preventing transaction-order manipulation. Second, PROF creates bundles whose inclusion is profitable to block producers, thereby ensuring that bundles see timely inclusion in blocks. PROF is backward-compatible, meaning that it works with existing and future PBS designs. PROF is also compatible with any desired algorithm for ordering transactions within a PROF bundle (e.g., first-come, first-serve, fee-based, etc.). It executes efficiently, i.e., with low latency, and requires no additional trust assumptions among PBS entities. We quantitatively and qualitatively analyze incentive structure of PROF, and its utility to users compared with existing solutions. We also report on inclusion likelihood of PROF transactions, and concrete latency numbers through our end-to-end implementation.

Figures (14)

• Figure 1: High-level design of PROF. Gray-shading shows existing PBS infrastructure. Without deployment of PROF, a block (shown in blue) is routed from PBS through a standard relay to a validator, resulting in validator profit $. With deployment of PROF, a PROF bundle may be added to a PBS-generated block to yield a new, enriched block with validator profit $$. Note that a PROF-enabled relay here is simply a standard relay, but with additional logic to concurrently produce the enriched block.
• Figure 2: MEV-Boost design. "Searchers" and "builders" together create transactions bundles from their private and public mempool. Builders submit a complete block to a PBS relay, which then forwards the block header, along with the bid, to the proposing validator. The validator receives the corresponding complete block after it commits to the block, by signing the block header.
• Figure 3: PROF design. We emphasize that the PROF sequencer here is a black-box and could be a decentralized protocol such as kelkar2023themis. While relays are already trusted intermediaries in PBS, to achieve defence in depth, we implement the PROF bundle merger inside a TEE as a defence (see Section \ref{['subsec:tee-depth']})
• Figure 4: PROF allows for multiple sequencers to operate concurrently, and chooses the best PROF-enriched block for the validator.
• Figure 5: Protected bundles from multiple PROF sequencers can be included in the final PROF-enriched block.

Theorems & Definitions (2)

• Definition 1
• Remark 1