Ethereum, Dark Forests and the Limits of Transparency

Ethereum, Dark Forests and the Limits of Transparency

(Krystian Piątek/Unsplash)

“The mempool is a dark forest,” proclaims . And he goes on to paint a picture of a dangerous place full of predators – arbitrage bots, front-runners and the like:

“They hide in the mempool waiting to attack. They monitor any and all transactions with the intention to exploit them. If any profitable opportunities arise? They pounce.”

Scary stuff. There’s only one problem. What Adams describes is not a dark forest. It’s a floodlit plain.

Crypto markets are lit markets, by definition. So predators can see the prey coming. The prey can see them, too – but the prey cannot escape. When you submit an transaction, it must wait in that until a miner picks it up. It has nowhere else to go. So it is, to coin a phrase, a “sitting duck.” Every predator in the pool can see it. It inevitably gets replicated, front-run or otherwise stolen. The wonder is that any legitimate transactions ever get verified at all.

Perhaps, instead of a dark forest, we should think of the mempool as like a desert. The sun shines down on it relentlessly and there is nowhere to hide. And it is infested with snakes. A filmed baby iguanas emerging from their eggs into the blinding light of the desert floor, then running the gauntlet of a myriad snakes. 

Even though they could outrun the snakes, few of them made it: they were continually ambushed, and one false or faltering step was fatal. Few made it to the high ground that the snakes couldn’t reach. The wonder is that any did at all.  

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