Smart contracts offer a way to credibly commit to a mechanism, as long as it can be expressed as an easily computable mapping from inputs, in the form of transactions on-chain, to outputs: allocations and payments. But proposers decide which transactions to include, allowing them to manipulate these mechanisms and extract temporary monopoly rents known as MEV. Motivated by both general interest in running auctions on-chain, and current proposals to conduct MEV auctions on-chain, we study how these manipulations effect the equilibria of auctions. Formally, we consider an independent private value auction where bidders simultaneously submit private bids, and public tips, that are paid to the proposer upon inclusion. A single additional bidder may bribe the proposer to omit competing bids. We show that even if bids are completely sealed, tips reveal bids in equilibrium, which suggests that encrypting bids may not prevent manipulation. Further, we show that collusion at the transaction inclusion step is extremely profitable for the colluding bidder: as the number of bidders increases, the probability that the winner is not colluding and the economic efficiency of the auction both decrease faster than $1/n$. Running the auction over multiple blocks, each with a different proposer, alleviates the problem only if the number of blocks is larger than the number of bidders. We argue that blockchains with more than one concurrent proposer can credibly execute auctions on chain, as long as tips can be conditioned on the number of proposers that include the transaction.

翻译：智能合约提供了一种可信地承诺机制的方式，前提是该机制可表示为从输入（即链上交易形式）到输出（分配与支付）的易于计算的映射。然而，区块提议者决定哪些交易被包含，从而能够操纵这些机制并提取称为MEV的临时垄断租金。受对在链上运行拍卖的一般兴趣以及当前在链上进行MEV拍卖提案的启发，我们研究这些操纵如何影响拍卖的均衡。形式上，我们考虑一个独立私有价值拍卖，其中竞拍者同时提交私有出价和公开小费（小费在交易被包含时支付给提议者）。一个额外的竞拍者可能贿赂提议者以忽略竞争出价。我们表明，即使出价完全密封，小费也会在均衡中揭示出价，这暗示加密出价可能无法阻止操纵。进一步，我们表明在交易包含步骤中的合谋对合谋竞拍者极为有利：随着竞拍者数量增加，非合谋竞拍者获胜的概率以及拍卖的经济效率下降速度快于$1/n$。如果多个区块各有不同提议者，则跨多个区块运行拍卖仅当区块数量超过竞拍者数量时才能缓解该问题。我们认为，只要小费可取决于包含交易的提议者数量，拥有多个并发提议者的区块链便能可信地在链上执行拍卖。