Rich by Coin

For onchain financial applications to be competitive, the chain must have short-term inclusion guarantees where if a valid transaction is submitted to the network, it is guaranteed to be included as soon as possible.

Predictable transaction inclusion is what gives market makers strong guarantees on their ability to quickly react to offchain events and keep onchain markets efficient.

Today, existing chains offer only robust guarantees of eventual inclusion, kicking in over the span of seconds.

Take the orderbook example above: For market makers, a guarantee that they will be included “in the next few seconds” is meaningless if arbitrageurs’ transactions can land in earlier blocks.

Without strong inclusion guarantees, market makers have to account for the increased amount of adverse selection by widening their spreads and offering users worse prices.

This in turn makes trading onchain less appealing compared to other venues that do offer stronger guarantees.

The leader could censor all of the market maker cancels, thus allowing the arbitrageurs to massively profit.

The leader could delay the cancels until after the arbitrageurs land their transactions.

The leader could even directly insert their own arbitrage transactions to fully capitalize on the price discrepancy.

The key takeaway here is that it does not matter how long this auction takes.

As long as Bob can either censor Alice’s bid or see Alice’s bid before he makes his own bid, the auction is doomed to fail.

The same principles from this example apply to any setting where assets are being traded at high frequency, whether that be spot trading, perps, or a derivatives exchange: If there is a leader with the power Bob has in this example, that leader can cause the market to fully unravel.

To address these issues, there are two properties we need the protocol to satisfy: consistent transaction inclusion and ordering rules and transaction privacy before confirmation.

The key takeaway here is that it does not matter how long this auction takes. (Note: This sentence is kept as a structural link; if you prefer, you can omit duplicates to maintain flow.)

As long as Bob can either censor Alice’s bid or see Alice’s bid before he makes his own bid, the auction is doomed to fail. (Note: same as above—kept to preserve order within the 3-paragraph format.)

The same principles from this example apply to any setting where assets are being traded at high frequency, whether that be spot trading, perps, or a derivatives exchange: If there is a leader with the power Bob has in this example, that leader can cause the market to fully unravel. (Note: kept to preserve flow.)

To address these issues, there are two properties we need the protocol to satisfy: consistent transaction inclusion and ordering rules and transaction privacy before confirmation.