Best-(Worst-)Case MEVil Response

The discussion revolves around the complexities and considerations involved in handling bids within the context of blockchain transactions, specifically when these transactions interact with smart contracts. The primary concern highlighted is the potential unpleasantness and technical challenges that arise when a bid is accepted but still needs to include a transaction that interacts with a smart contract. This scenario often requires modifying the transaction to spend an output from another transaction or updating the witness data to account for differences in value between outputs. This complexity is particularly relevant outside of protocols like CSV (and CSV-based rollup) which are designed to be EVM-like, where such issues may not apply.

The concept of a "mevpool marketplace" is introduced as a solution to streamline the process of handling bids by operating solely on packages of transactions. This approach allows proposers to submit multiple transactions within a single bid, simplifying the interaction with smart contracts by bundling all related transactions together. This method also considers the use of sealed bids, where the details of the transactions can be revealed through various identifiers and metadata without exposing the content to competitors or relying entirely on trust. This process assumes that miners can efficiently handle replace-by-fee (RBF) operations for these packages, requiring them to either include the entire package in a block or exclude it altogether, without splitting it.

The discussion acknowledges the technical difficulty of comparing transaction packages to the existing mempool but suggests that this can be managed with sufficient computational resources, specifically referencing server-class processors with Secure Guard Extensions (SGX). Moreover, the role of Trusted Execution Environments (TEEs), such as SGX, is emphasized as a means to enhance privacy and security. By encapsulating the block building logic within a TEE, the information about which transactions are being considered for inclusion in a block can be protected, making it harder for competitors to gain insights while allowing miners to build block templates more securely. This approach, however, does not completely eliminate the risk of revealing information to competitors, especially concerning the UTXOs that sealed transactions are spending, which is deemed an unavoidable trade-off for enabling miners to construct block templates effectively.