A recent viral clip showed Don Wilson of DRW criticizing public blockchains for their lack of MEV-resistance. Wilson argued that, as a result of this, public blockchains are not suitable for financial markets. This critique isn't going to go unanswered. Last night, Category Labs published a frontier research result for encrypted mempools. This is a significant result that leads the way to practical MEV resistance, and is how our industry will prevail against the private blockchain crowd. Background When you submit a transaction on a blockchain, it sits in a pending state where it may be frontrun by a bot. The cleanest fix would be for users to encrypt transactions until they're included in a block, but doing that efficiently is very hard: you need a committee of servers that can jointly decrypt only the transactions that make it into each block, fast enough to keep up with block times. Up to now, this idea hasn't been practical, as the best threshold encryption schemes are too slow, introduce censorship attacks, or introduce impractical operational steps for users or validators. Category Labs has a solution: BTX, a new scheme for Batch threshold encryption (BTE) that is actually practical and performant. This leads the way to encrypted mempools on Monad. The result Batched Threshold Encryption (BTE) lets a committee of servers jointly decrypt a specified set of encrypted results from a pool while keeping the rest private. Prior BTE schemes each had a drawback: - some required per-block MPC setup - some bound each ciphertext to a specific block or epoch (limiting rollover and enabling censorship) - some required users to pick an index from a small namespace (resulting in occasional collisions) - and the ones that avoided all these issues were either computationally prohibitive or required a common reference string (CRS) that grows with the number of sessions. BTX, the new mechanism proposed in the paper, is simultaneously: - epochless - collision-free - computationally efficient, and - compact In the paper, the authors implement BTX and benchmark it against the strongest two prior schemes (PFE from Boneh et al. and BEAT++ from Agarwal et al.). (BEAT++ is a prior result by most of the authors of the present paper.) BEAT++ is fast but has a censorship-enabling design flaw; PFE is clean but slow and has bigger ciphertexts; and Fernando et al. (a third leading scheme) is clean but doesn't scale to long-lived deployments. BTX is the first construction that's simultaneously collision-free, epochless, compact, and fast. BTX is a significant result solving a huge problem. Check out the paper in the next post.

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