Today Flashbots releases v0.2 and introduces bundle merging. That means that Flashbots miners can now mine multiple bundles per block.
A thread digging into this huge release and what that means 👇🏻
Flashbots gives users a way to communicate their transaction ordering preferences to miners via "bundles."
Bundles are groups of transactions executed in the order they are provided. Either the entire bundle is executed, or none of it is.
Bundles are typically very sensitive to ordering: you don't want other transactions to come before you & make a transaction your bundle fail
How did we deal with that sensitivity? We limited bundles included to 1 per block placed at the top of the block
An example arbitrage at the top of the block from the inimitable @mevalphaleak
Today most Flashbots bundles are for arbitrage and sandwiches, with a small but growing liquidation population and a long tail of other interesting things
etherscan.io/txs?block=1249…
Since Flashbots launched this has been very successful!
Over 100,000 bundles have been included on chain, leading to more efficient MEV extraction and new profits for searchers and miners.
But historically a ton of value has been left on the table. For a given block if you looked at random arbitrage and liquidation bundles they probably don't conflict!
Theoretically you can include both of those bundles in any order at the top of a block.
How many bundles should be included? In what order? How do you figure that out quickly? These are tough questions. Our algorithm for this is here: hackmd.io/@flashbots/cor…
tl;dr sort by profit, try adding bundles in a sequence, build parallel blocks w/ different #s of bundles
Today bundle merging went live for the 1st time 🥳
Ethermine mined the 1st multi-bundle block which you can see below. 3 different bundles were included in this block. They came from 3 different searchers & interacted with 6 tokens, and 4 DeFi protocols
etherscan.io/txs?block=1249…
The first bundle was a backrunning arbitrage of someone buying Matic using Uniswap v3
The searcher (Ethermine's!) arbed the Uniswap v3 pool back into alignment with the v2 pool. 0.13 ETH profit or so.
etherscan.io/tx/0x21a688cb8…
The second was a backrun of this $750k sale of LINK using 0x
A familiar face, @mevalphaleak, arbed this using Bancor and Uniswap v2 for 0.23 ETH profit in total, 0.188 of which went to the miner
etherscan.io/tx/0x4b0903b5d…
The last was a sandwich of someone's purchase of DIAMOND ZOOM on Uni v2, getting in front of their buy to drive the price up, and dumping afterwards.
0.054 ETH of profit, 0.046 of which went to the miner
etherscan.io/tx/0xd3301a476…
Total miner revenue from MEV: 0.372 ETH!
The actual "profit" will be a bit lower due to the opportunity cost of including bundles (missed gas fees), but regardless that's a massive increase in miner revenue per block.
& by the way that gets internalized by stakers in ETH2
Historically each Flashbots block has led to an average of ~0.2 ETH profit - with a big increase lately with market volatility - with the limitation of only including one bundle.
We expect that profit per block will see a substantial increase from bundle merging.
Lastly bundle merging also opens up the door to regular users getting their transactions included via Flashbots much more often!
Now you are no longer competing with bots to be the only bundle in a block🙂
As always check out our Github to learn more and get involved and thank you to the tireless and amazing Flashbots team who makes all of this possible.
github.com/flashbots/pm
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