Flashblocks auction timing reduces bidding fees and alters competition
Priority Gas Auction Cadence and Searcher Competition: Evidence from Flashblocks on Base
Computational Engineering, Finance, and ScienceComputer Science and Game Theory
Summary
When blockchain transactions compete to be processed, they pay fees that depend on auction rules. The authors study how breaking a single auction into many shorter auctions changes the fees bidders pay and how they compete. They find that shorter auctions lead to lower average fees and shift when fees are paid within a block. Faster bidders have an edge because getting their transaction in earlier sometimes blocks others who pay more. The paper models these effects and shows that making auctions shorter than 200 milliseconds gives little extra benefit.
What this means in practice
- •For blockchain protocol designers: Adjust auction timing parameters to optimize fee levels and transaction competition based on real user behavior data.
- •For decentralized finance teams: Anticipate how changes in gas auction cadence affect bidding strategies and profitability of arbitrage bots.
Authors
Pranay Anchuri, Edward W. Felten, Akaki Mamageishvili
Abstract
Flashblocks divide a block's priority gas auction into shorter sequential auctions that commit transaction order before the block is complete. We ask how this auction cadence affects bidding and competition among automated arbitrageurs, or searchers. In July 2025 Base replaced a single 2 s auction with ten 200 ms auctions. We use this change to estimate the searcher response from on-chain data alone. On an address-day panel of 3,032 searchers and 8,053 activity-matched controls, a difference-in-differences design estimates a 0.187 gwei fall in the effective priority fee (59% of the searcher pre-period mean). The share of searcher priority-fee value paid in the first tenth of block gas falls from 0.98 to 0.28. This fee compression is the identified effect. The revert-rate response is not (causally) identified and is reported descriptively. At the level of a single opportunity, the winning fee splits into an approximately invariant floor and a competitive premium. The premium scales about linearly with auction duration at high contention and less steeply at low contention. A first-price auction model with uncertain arrival and partial payments by losing searchers accounts for this pattern. We match attempts to the pool they contest. A higher-fee transaction reverts behind a lower-fee winner that landed earlier in 1.9 to 2.7% of contested opportunities by value, an upper bound. Latency therefore decides part of the ordering. A micro-auction model projects diminishing returns from shortening the window below 200 ms, as bids approach a nonzero floor. Rollups such as Arbitrum One now make auction cadence a governance tunable parameter, so these estimates inform how it is set.