Many early order flow auction designs handle the payment for orders when they execute on the chain rather than when they are won in the auction. Payments in these auctions only take place when the orders are executed, creating a free option for whoever wins the order. Bids in these auctions set the strike price of this option rather than the option premium. This paper develops a simple model of an order flow auction and compares contingent fees with upfront payments as well as mixtures of the two. Results suggest that auctions with a greater share of the payment contingent on execution have lower execution probability, lower revenue, and increased effective spreads in equilibrium. A Reputation system can act as a negative contingent fee, partially mitigating the downsides; however, unless the system is calibrated perfectly, some of the undesirable qualities of the contingent fees remain. Results suggest that designers of order flow auctions should avoid contingent fees whenever possible.

翻译：许多早期订单流拍卖设计在链上执行订单时支付费用，而非在赢得拍卖时支付。这些拍卖中的付款仅在订单执行时发生，为订单获胜者创造了一个免费期权。拍卖中的出价设定的是该期权的执行价格，而非期权费。本文构建了一个简单的订单流拍卖模型，比较了或有费用与预付款以及两者混合的机制。结果表明，支付中更大比例取决于执行情况（即或有费用占比更高的拍卖），在均衡状态下执行概率更低、收入更少且有效价差增加。声誉系统可作为负向或有费用部分缓解这些弊端；然而，除非该系统校准完美，否则或有费用的某些不良特性仍然存在。研究结果表明，订单流拍卖设计者应尽可能避免使用或有费用。