arXiv subjects

Burak Öz

Publications and source records attributed to Burak Öz.

11 recordsLinked to original sources

arXiv2026

No Place to Hide: An Analysis on Protected Order Flow Sandwich Attacks

Front-running has long plagued Ethereum's public mempool, earning it the nickname of a "dark forest", where predators lurk for profitable transactions. In response, Ethereum and other blockchain ecosystems increasingly rely on private RPCs and native protections to shield transactions from adversaries, which we refer to as protected order flow. Yet the effectiveness of these mechanisms in preventing front-running, and what trust assumptions they entail, remain poorly understood. In this work, we conduct the first longitudinal, three-year measurement study of sandwich attacks against protected order flow across six blockchains: Ethereum, Solana, Tron, Base, Arbitrum, and Monad. We introduce detection heuristics that capture wide attacks, both within and across blocks, and filter on bot behavior to distinguish sandwiches from legitimate trading activity. We identify 28.0 million sandwich attacks on Solana, 38,567 on Tron, 30,607 on Ethereum, and 1,889 on Base against transactions intended to be protected from front-running. Reorged blocks expose a further 2,875 Ethereum victims. Unlike conventional public-mempool sandwiches, these attacks rarely occur tightly around their victims and, outside Solana, are carried out by a small number of entities. Our analysis uncovers exposures at every layer: validator- and application-level exposure on Solana, order-flow auctions and reorged blocks on Ethereum, first-come-first-served ordering that fails to prevent latency-based front-running on Tron, and both an RPC bug that exposes pending transactions and predictable victim behavior on Base. These findings show that existing front-running protections can provide substantially weaker guarantees than users expect, highlighting the need for stronger end-to-end defenses against sandwich attacks.

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arXiv2026

Just-in-Time Resale in an Ahead-of-Time Auction for Faster Execution

We study Arbitrum's Timeboost auction, an ahead-of-time mechanism that sells a 200ms ordering advantage in an otherwise first-come, first-served transaction ordering policy. The market naturally divides into two phases: a competition phase, in which the dominant searchers compete directly in the primary auction, and a coordination phase, in which they source fast-lane access through Kairos, a Just-in-Time resale intermediary. We use auction bids, time-boosted transactions, and on-chain payment traces to study how well ahead-of-time bids predict realized CEX--DEX arbitrage profits and how the emergence of resale changes surplus allocation. We find that ahead-of-time bids are noisy predictors of short-horizon arbitrage profits. During the competition phase, bid--profit correlations are statistically significant but economically modest at the round level, while correlations increase when profits are aggregated over longer horizons. This suggests that bidders can identify favorable market conditions but face substantial uncertainty about the realized value of any individual one-minute fast-lane interval. After the Kairos transition, competition in the primary auction weakens sharply: in our focused transition-analysis window, paid bids fall from 62.7% of the top bid before the transition to 14.8% thereafter, while total searcher profits remain broadly similar. The resulting dynamics are most consistent with coordination through a common intermediary rather than direct competition in the primary auction. More broadly, our findings suggest that ahead-of-time allocation mechanisms can be vulnerable to secondary-market intermediation when competition among dominant participants is weak.

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arXiv2026

The Price of Decentralization in Block Building

Decentralized block building mechanisms replace the monopoly of a single proposer with multiple builders. However, their censorship-resistance and fair-access benefits depend not only on the number of builders, but also on where builders are geographically positioned to provide transaction coverage. We study this tension between builder location choice, user transaction coverage, and utility concentration by modeling decentralized block building as a stochastic coverage game. Builders choose regions, information sources emit transactions over a block construction round, and latency determines whether a transaction is received before the deadline. We show that the game is an exact potential game and admits a pure Nash equilibrium. We prove an asymptotically tight factor-2 bound on the Price of Anarchy, which we interpret as the price of decentralization from uncoordinated builder placement. We also study builder utility concentration, showing that the lowest-utility builder earns at least half of the highest-utility builder's payoff, and the utility-share HHI is at most 12.5% above the egalitarian benchmark. We complement the theory with simulations under richer latency and source environments and show that slot times, builder participation, and reward-sharing rules are important protocol design choices that can shape the price of decentralization.

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arXiv2026

To Wait or To Probe: Arbitrage Competition on High-Throughput Blockchains

Maximal Extractable Value (MEV) on high-throughput blockchains can be captured through targeted search, where bots identify opportunities off-chain and submit route-committed transactions, or through probabilistic search, where bots submit repeated attempts that resolve opportunity discovery during on-chain execution. This distinction has direct implications for spam, blockspace consumption, and protocol fee revenue. We model how ordering granularity, fee floors, and opportunity-access shocks shape competition between these architectures. Using cyclic arbitrage data on Base from June 2025 to February 2026, we develop a trace-level classifier for search architectures and show that the resulting labels correspond to distinct execution behavior. We test the model across three episodes: Flashblocks selects against broad on-chain probabilistic scanners; token-launch opportunity shocks temporarily revive probabilistic search; and higher fee floors select against probabilistic bots whose opportunity flow cannot sustain repeated attempts. In our sample, probabilistic search accounts for only 23% of arbitrage activity but produces 95% of spam and consumes 20% of Base gas. After Base's configuration changes, protocol fee revenue shifts toward successful arbitrages and away from spam, probabilistic bots pay higher priority fees, and spam consumes a smaller share of blockspace.

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arXiv2026

Geographical Centralization Resilience in Ethereum's Block-Building Paradigms

Decentralization has an important geographic dimension that conventional metrics, such as stake distribution, often overlook. Validator location affects resilience to regional shocks (e.g., outages, natural disasters, or government intervention) as well as fairness in reward access. Yet major blockchain protocols do not encode geographical location in their rules; instead, validator locations emerge from a combination of economic incentives, regulatory constraints, infrastructure availability, and validator deployment choices. When some locations offer systematic advantages, validators may strategically co-locate to increase expected rewards, as in Ethereum, where validators cluster along the Atlantic corridor, which exhibits favorable latency. In this paper, we develop a formal model of validators' geographical positioning incentives under Ethereum's protocol design, capturing the interaction between its two block-building paradigms, local and external block building, and the distribution of validators and information sources. We analyze the model under a mean-field approximation and complement it with agent-based simulations calibrated with real-world latency data to quantify how these incentives translate into geographical concentration under heterogeneous geographic and infrastructural conditions. Our results show that Ethereum's block-building architecture is not geographically neutral. Both paradigms create location-dependent payoffs and incentives to move closer to payoff-relevant parties to reduce propagation delays, though through different mechanisms. Asymmetric access to information sources further increases geographical centralization. We also show that consensus parameters, including attestation thresholds and slot times, affect latency sensitivity and can strengthen these effects. Finally, we discuss implications for protocol design and possible mitigation directions.

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arXiv2026

The Free Option Problem of ePBS

Ethereum's upcoming Glamsterdam upgrade introduces EIP-7732 enshrined Proposer--Builder Separation (ePBS), which improves the block production pipeline by addressing trust and scalability challenges. Yet it also creates a new liveness risk: builders gain a short-dated ``free'' option to prevent the execution payload they committed to from becoming canonical, without incurring an additional penalty. Exercising this option renders an empty block for the slot in question, thereby degrading network liveness. We present the first systematic study of the free option problem. Our theoretical results predict that option value and exercise probability grow with market volatility, the length of the option window, and the share of block value derived from external signals such as external market prices. The availability of a free option will lead to mispricing and LP losses. The problem would be exacerbated if Ethereum further scales and attracts more liquidity. Empirical estimates of values and exercise probabilities on historical blocks largely confirm our theoretical predictions. While the option is rarely profitable to exercise on average (0.82\% of blocks assuming an 8-second option time window), it becomes significant in volatile periods, reaching up to 6\% of blocks on high-volatility days -- precisely when users most require timely execution. Moreover, builders whose block value relies heavily on CEX-DEX arbitrage are more likely to exercise the option. We demonstrate that mitigation strategies -- shortening the option window or penalizing exercised options -- effectively reduce liveness risk.

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arXiv2025

Cross-Chain Arbitrage: The Next Frontier of MEV in Decentralized Finance

Decentralized finance (DeFi) markets spread across Layer-1 (L1) and Layer-2 (L2) blockchains rely on arbitrage to keep prices aligned. Today most price gaps are closed against centralized exchanges (CEXes), whose deep liquidity and fast execution make them the primary venue for price discovery. As trading volume migrates on-chain, cross-chain arbitrage between decentralized exchanges (DEXes) will become the canonical mechanism for price alignment. Yet, despite its importance to DeFi-and the on-chain transparency making real activity tractable in a way CEX-to-DEX arbitrage is not-existing research remains confined to conceptual overviews and hypothetical opportunity analyses. We study cross-chain arbitrage with a profit-cost model and a year-long measurement. The model shows that opportunity frequency, bridging time, and token depreciation determine whether inventory- or bridge-based execution is more profitable. Empirically, we analyze one year of transactions (September 2023 - August 2024) across nine blockchains and identify 242,535 executed arbitrages totaling 868.64 million USD volume. Activity clusters on Ethereum-centric L1-L2 pairs, grows 5.5x over the study period, and surges-higher volume, more trades, lower fees-after the Dencun upgrade (March 13, 2024). Most trades use pre-positioned inventory (66.96%) and settle in 9s, whereas bridge-based arbitrages take 242s, underscoring the latency cost of today's bridges. Market concentration is high: the five largest addresses execute more than half of all trades, and one alone captures almost 40% of daily volume post-Dencun. We conclude that cross-chain arbitrage fosters vertical integration, centralizing sequencing infrastructure and economic power and thereby exacerbating censorship, liveness, and finality risks; decentralizing block building and lowering entry barriers are critical to countering these threats.

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arXiv2024

Who Wins Ethereum Block Building Auctions and Why?

The MEV-Boost block auction contributes approximately 90% of all Ethereum blocks. Between October 2023 and March 2024, only three builders produced 80% of them, highlighting the concentration of power within the block builder market. To foster competition and preserve Ethereum's decentralized ethos and censorship-resistance properties, understanding the dominant players' competitive edges is essential. In this paper, we identify features that play a significant role in builders' ability to win blocks and earn profits by conducting a comprehensive empirical analysis of MEV-Boost auctions over a six-month period. We reveal that block market share positively correlates with order flow diversity, while profitability correlates with access to order flow from Exclusive Providers, such as integrated searchers and external providers with exclusivity deals. Additionally, we show a positive correlation between market share and profit margin among the top ten builders, with features such as exclusive signal, non-atomic arbitrages, and Telegram bot flow strongly correlating with both metrics. This highlights a "chicken-and-egg" problem where builders need differentiated order flow to profit, but only receive such flow if they have a significant market share. Overall, this work provides an in-depth analysis of the key features driving the builder market towards centralization and offers valuable insights for designing further iterations of Ethereum block auctions, preserving Ethereum's censorship resistance properties.

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arXiv2024

A Study of MEV Extraction Techniques on a First-Come-First-Served Blockchain

Maximal Extractable Value (MEV) has become a significant incentive on blockchain networks, referring to the value captured through the manipulation of transaction execution order and strategic issuance of profit-generation transactions. We argue that transaction ordering techniques used for MEV extraction in blockchains where fees can influence the execution order do not directly apply to blockchains where the order is determined based on transactions' arrival times. Such blockchains' First-Come-First-Served (FCFS) nature can yield different optimization strategies for entities seeking MEV, known as searchers, requiring further study. This paper explores the applicability of MEV extraction techniques observed on Ethereum, a fee-based blockchain, to Algorand, an FCFS blockchain. Our results show the prevalence of arbitrage MEV getting extracted through backruns on pending transactions in the network, uniformly distributed to block positions. However, on-chain data do not reveal latency optimizations between specific MEV searchers and Algorand block proposers. We also study network clogging attacks and argue how searchers can exploit them as a viable ordering technique for MEV extraction in FCFS networks.

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arXiv2024

Playing the MEV Game on a First-Come-First-Served Blockchain

Maximal Extractable Value (MEV) searching has gained prominence on the Ethereum blockchain since the surge in Decentralized Finance activities. In Ethereum, MEV extraction primarily hinges on fee payments to block proposers. However, in First-Come-First-Served (FCFS) blockchain networks, the focus shifts to latency optimizations, akin to High-Frequency Trading in Traditional Finance. This paper illustrates the dynamics of the MEV extraction game in an FCFS network, specifically Algorand. We introduce an arbitrage detection algorithm tailored to the unique time constraints of FCFS networks and assess its effectiveness. Additionally, our experiments investigate potential optimizations in Algorand's network layer to secure optimal execution positions. Our analysis reveals that while the states of relevant trading pools are updated approximately every six blocks on median, pursuing MEV at the block state level is not viable on Algorand, as arbitrage opportunities are typically executed within the blocks they appear. Our algorithm's performance under varying time constraints underscores the importance of timing in arbitrage discovery. Furthermore, our network-level experiments identify critical transaction prioritization strategies for Algorand's FCFS network. Key among these is reducing latency in connections with relays that are well-connected to high-staked proposers.

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arXiv2023

Time Moves Faster When There is Nothing You Anticipate: The Role of Time in MEV Rewards

This study explores the intricacies of waiting games, a novel dynamic that emerged with Ethereum's transition to a Proof-of-Stake (PoS)-based block proposer selection protocol. Within this PoS framework, validators acquire a distinct monopoly position during their assigned slots, given that block proposal rights are set deterministically, contrasting with Proof-of-Work (PoW) protocols. Consequently, validators have the power to delay block proposals, stepping outside the honest validator specs, optimizing potential returns through MEV payments. Nonetheless, this strategic behaviour introduces the risk of orphaning if attestors fail to observe and vote on the block timely. Our quantitative analysis of this waiting phenomenon and its associated risks reveals an opportunity for enhanced MEV extraction, exceeding standard protocol rewards, and providing sufficient incentives for validators to play the game. Notably, our findings indicate that delayed proposals do not always result in orphaning and orphaned blocks are not consistently proposed later than non-orphaned ones. To further examine consensus stability under varying network conditions, we adopt an agent-based simulation model tailored for PoS-Ethereum, illustrating that consensus disruption will not be observed unless significant delay strategies are adopted. Ultimately, this research offers valuable insights into the advent of waiting games on Ethereum, providing a comprehensive understanding of trade-offs and potential profits for validators within the blockchain ecosystem.

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