How Arbitrum scooped up $3m in three months from onchain transaction ordering

Arbitrum’s Timeboost transaction ordering system has generated almost $3 million in fees since its April launch, boosting its earnings amid competition from rival Ethereum layer 2s.

With 97% of those earnings flowing to Arbitrum DAO, Timeboost now accounts for almost half of the DAO’s income.

The windfall adds some much-needed income to Arbitrum, which lost its position as Ethereum’s largest layer 2 blockchain in October 2024 in terms of investor funds.

Auction

Base investor funds stand at $4.2 billion compared to Arbitrum’s $2.9 billion, according to DefiLlama.

Timeboost allows users to bid on an auction that happens every 60 seconds to determine how transactions are ordered on the blockchain.

The auction winner gets priority access, which means their transactions can be processed on the blockchain’s so-called express lane without having to wait for the default 200ms delay baked into Arbitrum.

That kind of prime positioning is a golden ticket to front-row transaction execution. And for the winning trader, it could mean being able to leverage an arbitrage opportunity or escape liquidation.

For Arbitrum, it’s been able to monetise blockspace beyond sequencer margins. And based on the revenue figures, Arbitrum seems to be discovering what Wall Street has known for decades: order flow is gold.

MEV attacks

It also aims to reduce the impact of a common type of exploit: Maximal extractable value attacks.

Not all MEV strategies are malicious, and they are popular on most blockchains, including Arbitrum.

They enable users to gain priority access for their transactions by paying higher fees to validators who are responsible for determining the way transactions are ordered on a blockchain.

However, MEV can also be exploited by bad actors via tactics like front-running, sandwich attacks, and uncle-bandit exploits. These malicious actions are designed to distort market conditions and extract value at the expense of other users.

With these tactics being rampant on blockchains, Timeboost seems like a tax on MEV by Arbitrum that tries to redirect that value back to its community.

In normal MEV transactions, the value is captured by so-called searchers who use complex infrastructure to gain an edge over other users.

And unlike MEV, Timeboost auction winners are not able to distort the blockchain by reordering transactions.

Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? Please contact him at osato@dlnews.com*.*

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