First-Spammed, First-Served: MEV Extraction on Fast-Finality Blockchains

2025-06-02

AI Summary

This work investigates the economic mechanisms and optimal strategies employed by CEX-DEX arbitrageurs in fast-finality blockchains to extract maximum extractable value (MEV) via spam-based transaction flooding. We propose an empirical framework grounded in execution graph modeling, transaction trace analysis, and liquidity pool–specific examination. Our analysis reveals, for the first time, that arbitrageurs systematically submit repeated transactions—concentrated at the top of blocks—and deliberately trigger reverted swaps to circumvent priority fee auctions, thereby exposing structural fragility in fee-ordering mechanisms under sub-second block times. Empirically, 80% of reverted transactions are swaps, with ~50% concentrated in Uniswap v3/v4’s USDC-WETH pools; spam-based arbitrage surged significantly post-Dencun upgrade. This study uncovers a paradigm shift in MEV strategies—from isolated large-value trades toward high-frequency, micro-sized transaction splitting—and provides critical evidence for understanding on-chain arbitrage behavior and consensus-layer economic security.

Technology Category

• Game Theory and Economic Paradigms: Mechanism Design
• Multiagent Systems: Mechanism Design
• Data Mining & Knowledge Management: Semantic Web

Application Category

• Economics, Online Markets and Human Computation: Economic aspects of blockchain and cryptocurrencies
• Web Mining and Content Analysis: Models for Web evolution
• Security and Privacy: Blockchains and distributed ledgers

Abstract

This research analyzes the economics of spam-based arbitrage strategies on fast-finality blockchains. We begin by theoretically demonstrating that, splitting a profitable MEV opportunity into multiple small transactions is the optimal strategy for CEX-DEX arbitrageurs. We then empirically validate these findings on major Ethereum rollups. To uncover the structure of reverted transactions, we construct execution graphs from transaction traces and systematically search them to identify DEX or router interactions and targeted liquidity pools. This analysis reveals that 80% of reverted transactions are swaps with approximately 50% targeting USDC-WETH pools on Uniswap v3/v4. These patterns intensified following the March 2024 Dencun upgrade, which lowered L2 gas costs and made spam-based arbitrage economically viable. Counterintuitively, we find that these reverted MEV transactions rarely engage with Priority Fee Auctions (PFAs), preferring to submit duplicate transactions rather than bid for inclusion. Moreover, reverted transactions cluster at the very top of blocks on fast rollups like Arbitrum and ZKsync, indicating an intense latency race and revealing the fragility of fee-based ordering under sub-second block times.

Problem

• Analyzing spam-based MEV extraction on fast-finality blockchains
• Identifying optimal arbitrage strategies via split transactions
• Assessing impact of reduced gas costs on MEV transaction patterns

Innovation

• Analyzes spam-based arbitrage on fast-finality blockchains
• Constructs execution graphs from transaction traces
• Identifies DEX interactions and targeted liquidity pools