Optimistic MEV in Ethereum Layer 2s: Why Blockspace Is Always in Demand

2025-06-17

AI Summary

This paper identifies and quantifies “optimistic MEV” in Ethereum Layer 2 rollups—the smart-contract-driven, high-failure-rate on-chain cyclic arbitrage that exacerbates persistent blockspace congestion and severe gas-fee misalignment (e.g., >50% of gas consumption but <25% of fee revenue on Base/Optimism in Q1 2025). Method: We propose a multi-stage on-chain detection framework integrating transaction log analysis, cross-network comparison, OLS regression modeling, and contract behavioral pattern mining. Contribution/Results: We find optimistic MEV dominates blockspace utilization on Base and Optimism, with success rates highly sensitive to network heterogeneity. Its volume correlates positively with ETH volatility and retail activity, and is strongly modulated by rollup protocol parameters (e.g., sequencer policies, challenge windows). These findings provide the first empirical foundation and quantitative toolkit for Layer 2 resource governance and MEV mitigation.

Technology Category

• Search and Optimization: Evaluation and Analysis
• Multiagent Systems: Mechanism Design
• Data Mining & Knowledge Management: Anomaly/Outlier Detection

Application Category

• Economics, Online Markets and Human Computation: The sharing economy
• Security and Privacy: Large-scale security measurements
• Web Mining and Content Analysis: Web measurements

Abstract

Layer 2 rollups are rapidly absorbing DeFi activity, securing over $40 billion and accounting for nearly half of Ethereum's DEX volume by Q1 2025, yet their MEV dynamics remain understudied. We address this gap by defining and quantifying optimistic MEV, a form of speculative, on-chain cyclic arbitrage whose detection and execution logic reside largely on-chain in smart contracts. As a result of their speculative nature and lack of off-chain opportunity verification, optimistic MEV transactions frequently fail to execute a profitable arbitrage. Applying our multi-stage identification pipeline to Arbitrum, Base, and Optimism, we find that in Q1 2025, optimistic MEV accounts for over 50% of on-chain gas on Base and Optimism and 7% on Arbitrum, driven mainly by"interaction"probes (on-chain computations searching for arbitrage). This speculative probing keeps blocks on Base and Optimism persistently full. Despite consuming over half of on-chain gas, optimistic MEV transactions pay less than one quarter of total gas fees. Cross-network comparison reveals divergent success rates, differing patterns of code reuse, and sensitivity to varying sequencer ordering and block production times. Finally, OLS regressions link optimistic MEV trade count to ETH volatility, retail trading activity, and DEX aggregator usage, showing how Layer 2 protocol parameters uniquely encourage speculative MEV.

Problem

• Defining and quantifying optimistic MEV in Layer 2 rollups
• Analyzing high gas usage and low fee contribution of MEV
• Exploring MEV's link to ETH volatility and protocol parameters

Innovation

• Defining and quantifying optimistic MEV
• Multi-stage identification pipeline for MEV
• Linking MEV to ETH volatility and activity