Encrypted mempools are a class of solutions aimed at preventing or reducing negative externalities of MEV extraction using cryptographic privacy. Mempool encryption aims to hide information related to pending transactions until a block including the transactions is committed, targeting the prevention of frontrunning and similar behaviour. Among the various methods of encryption, threshold schemes are particularly interesting for the design of MEV mitigation mechanisms, as their distributed nature and minimal hardware requirements harmonize with a broader goal of decentralization. This work looks beyond the formal and technical cryptographic aspects of threshold encryption schemes to focus on the market and incentive implications of implementing encrypted mempools as MEV mitigation techniques. In particular, this paper argues that the deployment of such protocols without proper consideration and understanding of market impact invites several undesired outcomes, with the ultimate goal of stimulating further analysis of this class of solutions outside of pure cryptograhic considerations. Included in the paper is an overview of a series of problems, various candidate solutions in the form of mempool encryption techniques with a focus on threshold encryption, potential drawbacks to these solutions, and Osmosis as a case study. The paper targets a broad audience and remains agnostic to blockchain design where possible while drawing from mostly financial examples.

翻译：加密内存池是一类旨在利用密码学隐私机制预防或减少MEV提取负面外部性的解决方案。内存池加密旨在隐藏待处理交易的相关信息，直至包含该交易的区块被确认，以防范抢先交易及类似行为。在各类加密方法中，阈限方案因其分布式特性与极低的硬件需求契合去中心化的广泛目标，对设计MEV缓解机制具有特殊价值。本研究超越阈限加密方案的形式化与技术密码学层面，聚焦于将加密内存池作为MEV缓解技术实施时所涉及的市场与激励影响。具体而言，本文论证了若未经审慎考量市场影响便部署此类协议，将引发若干不良后果，其最终目的在于推动学术界超越纯粹密码学视角，对此类解决方案展开进一步分析。本文包含对系列问题的综述、以阈限加密为重点的候选内存池加密技术方案、这些方案的潜在缺陷，以及Osmosis作为案例研究。本文面向广泛受众，在可能情况下保持对区块链设计的中立性，并主要引用金融领域实例。