A recent report by Blocknative revealed that private transactions are becoming more common on the Ethereum network.
As of August 20, private transactions now make up about 30% of Ethereum’s order flow but account for more than half of all gas consumption on the network.
Private transactions are processed through “dark pools,” where trades are sent directly to validators rather than entering the public transaction queue.
This method helps protect users from front-running by automated trading bots, a practice known as Maximum Extractable Value (MEV), which can exploit transactional data for profit.
Despite the security benefits, private transactions are more gas-intensive, leading to higher overall gas usage. The report mentions that a few companies, like Beaver, Titan, Rsync, and Flashbots, dominate private transactions. Since March, their gas usage has increased by 130% to 150%.
This trend affects users who rely on public transactions. Since private transactions use up a large share of block space, gas prices for public transactions are becoming less predictable. This can result in either having transactions stuck due to underpricing or overpaying to ensure timely inclusion on the blockchain.
Overall, while private transactions offer protection against MEV, they introduce new challenges for users in the public queue and affect the overall gas market dynamics on Ethereum.
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