Paper 2026/2265

The Illusion of Payload Blindness: Why MEV Mitigations Fail in Practice

Abstract

In public blockchains, the ability to order visible transactions allows block producers to extract value from users, a problem known as Maximal Extractable Value (MEV). Proposer-Builder Separation has turned that right into a formalized auction, and the leading protocol-level mitigations answer it with payload blindness: encrypted mempools, verifiable permutations, and block delay hide or scramble transactions before the order is fixed. Every such mitigation carries a security argument that assumes an adversary who learns nothing before the order commits. Deployed systems face a different adversary, and this paper measures the cost of that difference. We evaluate the three families of mitigations against a single adversary hierarchy, using closed-form analysis and simulations calibrated to Ethereum. Against a fully blind adversary, the outcome follows from the definitions: encryption with a permutation removes the attack classes that depend on transaction content, and block delay increases extraction rather than reducing it. Once that idealization is dropped, deployment problems dominate. The unencrypted envelope identifies the sender, so past behavior restores a usable guess at hidden content. Optional encryption gives builders a reason to starve the transactions it protects, and voluntary adoption then collapses. Key rotation turns a cryptographic parameter into a source of queueing congestion. Suppressing extraction, finally, removes far more producer revenue than it returns to users in lower fees, so the cost of every mitigation falls on the party that controls its deployment. The binding obstacles to MEV-free blockchains are therefore liveness and deployment incentives rather than cryptography.