# Batching, Bidding and Latency

**URL:** https://collective.flashbots.net/t/batching-bidding-and-latency/2301
**Category:** Research
**Created:** [August 29, 2023, 11:39pm UTC](https://collective.flashbots.net/t/batching-bidding-and-latency/2301 "2023-08-29T23:39:51Z")
**Posts on this page:** 1
**Page:** 1

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### Author: ![Christoph](https://collective.flashbots.net/letter_avatar_proxy/v4/letter/c/eb8c5e/32.png) [@Christoph](https://collective.flashbots.net/u/Christoph)
#### Post date: [August 29, 2023, 11:39pm UTC](https://collective.flashbots.net/t/batching-bidding-and-latency/2301/1 "2023-08-29T23:39:51Z")

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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](https://flashbots.notion.site/Batching-Bidding-and-Latency-db23db03ca4745df9409289283cd4d1b?pvs=4), 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](https://medium.com/offchainlabs/time-boost-a-new-transaction-ordering-policy-for-arbitrum-5b3066382d62), something else?

I want to make sense of several aspects of transaction ordering policies:

- Can we avoid latency competition by using bids to determine the ordering and inclusion of transactions? (not really)

- How does latency competition look like in a batch auction world? (not good, we have zero average profit for bidders in equilibrium when accounting for the cost of latency investment)

- What are the performance differences between batch auctions and hybrid formats such as the time boost proposal for Arbitrum? (depends on the parameterization, but in general they look very similar)

I think that the results are particularly relevant for roll-up sequencing but should also inform the broader transaction ordering discourse for L1s or off-chain aggregators.

I would be happy for any feedback, comments, suggestions, questions, opinions etc.