Revert protection is a feature provided by some blockchain platforms that prevents users from incurring fees for failed transactions. This paper explores the economic implications and benefits of revert protection, in the context of priority auctions and maximal extractable value (MEV). We develop an equilibrium game theoretic model that captures the behavior of users (MEV searchers) bidding to have their transaction included ahead of others, in an environment where only a single transaction will succeed in realizing the common value of an opportunity, and in settings both with and without revert protection. Our model applies to a broad range of settings, including Layer 1 (L1) blockchains (e.g., Ethereum mainnet) and Layer 2 (L2) blockchains, and auctions such as ``bundle auctions'' (on L1s) or priority ordering auctions (on L2s). We establish that, in the absence of revert protection, users will employ randomized strategies to mitigate the impact of paying for failed transactions. This will ultimately result in less auction revenue, despite the fact that failed transactions still pay fees. Our results quantify in closed form how revert protection enhances auction revenue, and also improves market efficiency and provides for more efficient use of blockspace, as a function of the underlying parameters (the value of the MEV opportunity, the base fee, the revert penalties, and the number of participating agents).

翻译：回滚保护是某些区块链平台提供的一项功能，旨在防止用户为失败的交易支付费用。本文在优先权拍卖和最大可提取价值（MEV）的背景下，探讨了回滚保护的经济影响与效益。我们建立了一个均衡博弈论模型，该模型刻画了用户（MEV搜索者）在竞标以使自身交易优先于他人被包含时的行为，其环境设定为：仅有一笔交易能够成功实现某个机会的公共价值，且同时涵盖具备与不具备回滚保护两种情形。我们的模型适用于广泛的应用场景，包括Layer 1（L1）区块链（例如以太坊主网）和Layer 2（L2）区块链，以及诸如“捆绑拍卖”（在L1上）或优先排序拍卖（在L2上）等拍卖机制。我们证明，在缺乏回滚保护的情况下，用户将采用随机化策略以减轻为失败交易付费的影响。尽管失败的交易仍需支付费用，但这最终将导致拍卖收入减少。我们的结果以闭式形式量化了回滚保护如何提升拍卖收入，并同时提高市场效率及促进区块空间更有效的利用，这些效应均表示为底层参数（MEV机会的价值、基础费用、回滚惩罚以及参与代理数量）的函数。