Suppose you want to choose a transaction ordering policy for your new roll-up sequencer, L1 blockchain, DEX aggregator, or new financial exchange. What should you do?
Well, I don’t know. But I have written a new article, that should be helpful. It proposes a game-theoretic framework to study the relative performance of different transaction ordering polices.
It takes the perspective of a contest for earlier transaction execution by two competing players. For example, the two players could compete on an arb opportunity arising through a price discrepancy between an off-chain CEX and an on-chain DEX. How this competition plays out, depends on the transaction ordering policy in place: do we use FCFS, batch auctions, Arbitrum’s time boost, something else?