Best-(Worst-)Case MEVil Response

The discussion revolves around the complexity and potential inefficiencies involved when bids are passed directly to miners, especially concerning transactions that interact with smart contracts. The process, as described, involves modifying transaction W to spend an output of Y or a related transaction, along with updating the witness data to account for the difference in value between Y's and Z's outputs. This adjustment process is suggested to be more suitably handled by the proposer rather than the relay or builder, indicating a preference for streamlining the roles within transaction handling.

A proposed solution to streamline the process involves the establishment of a "mevpool marketplace" that operates exclusively with packages of transactions. This system would allow extractors who wish to prioritize their transactions (tx Y) to monitor the mempool for transactions interacting with specific smart contracts (Z), and then set up a transaction package to submit to the marketplace. This approach could foster a competitive environment where extractors submit competing packages, potentially driving fees higher. The marketplace would then forward these packages to miners for block template construction. The suggestion includes a method for handling sealed bids, where critical information such as the utxos spent, transaction and witness IDs, total signature operations, weight, and fee could be revealed, relying on either trust in the marketplace or a trusted execution environment for revealing transaction contents. This method assumes the capability of miners to perform package replace-by-fee (RBF) optimally and the addition of sealed transactions to the mempool, aiming to simplify the interaction between miners and the marketplace.

Furthermore, the necessity of revealing which utxos sealed transactions are spending is acknowledged as a potential strategic disadvantage since it might provide competitors with valuable insights. However, this is deemed an unavoidable aspect of ensuring that miners have the necessary information to build block templates accurately.