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手段预防或减少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提交，从而防止抢先交易及类似行为。在各种加密方法中，阈值方案因其去中心化特性与最低硬件要求契合广泛去中心化目标，成为设计MEV缓解机制时尤为值得关注的方案。本文超越阈值加密方案的纯形式化及技术性密码学层面，聚焦于将加密内存池作为MEV缓解技术实施时的市场与激励影响。特别地，本文论证若在缺乏对市场影响的恰当理解与考量情况下部署此类协议，将引发若干不良后果，其根本目的在于推动学界超越纯密码学视角对此类解决方案进行更深入分析。文中包含对系列问题的概述、以阈值加密为重点的各类候选内存池加密技术方案、这些方案潜在缺陷，以及Osmosis案例研究。本文面向广泛受众，在保持对区块链架构持中立态度的前提下，主要引用金融领域的实例进行论证。