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## MEV private order flows solutions
## private order flows solutions
<br>
#### private order flow protocols (POFPs)
<br>
* rpc-based mev solutions (private order flow)
* private order flows are realized by modifying either the user's rpc or by modifying the protocol's frontend
* the goal of private order flow protocols (POFPs)
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### stat arbs
* if CEX is greater than the price on chain (on theDEX), stat arbs will buy on the DEX and hedge on the CEX -> confident that the DEX price will drift towards the CEX price, but not confident that will happen to the CEX price
<br>
* if CEX is greater than the price on chain (DEX), stat arbs can buy on the DEX and hedge on the CEX -> confident that the DEX price will drift towards the CEX price, but not confident that will happen to the CEX price
* problem: settlement mismatch -> CEX trades are fast but blockchains aren't -> start arbs are unsure if the trade will land or competitors will beat them
* from the time between trade submission and receipt of the next block, the trade (their exposure to the assets) is uncertain
* the greater the uncertainty, the more the profit estimate needs to be marked down
* while volatility of the token is important, the longer the time period between blocks, the longer tx remains, and the longer can go without being fully hedged
* while volatility of the token is important, the longer the time period between blocks, the longer tx remains, and the longer it can go without being fully hedged
* as block time increases, stat arb MEV profit estimates get marked down -> payments made by stat arbers to miners/validators or to users/traders decrease
* conclusion: the battle between PFOF-style MEV could lead to increase block times for stat arbers, decreasing combined realzied MEV
* conclusion: the battle between PFOF-style MEV could lead to increase block times for stat arbers, decreasing combined realized MEV
<br>
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#### resources
<br>
* [private order flow and the block builder market, by jon charbonneau](https://twitter.com/jon_charb/status/1562916372505665536)
* [ethereum's biggest issue no one's talking about](https://mariusvanderwijden.github.io/blog/2022/10/21/lightclients/)