# CASTY: MEV-capturing AA By [askyv](https://paragraph.com/@askyv) ยท 2025-01-31 --- Abstract -------- With CASTY, originators such as DApp providers can auction the right to first arbitrage through a smart contract. The searcher is assured trustlessly that their bundle will be executed at the start of each block. Through CASTY, originators are incentivized to send orders to a public mempool and avoid becoming exclusive order flow (EOF). Searchers are motivated to send bundles to various block builders without worrying about trust costs. Product Vision and Scope ------------------------ Our goal is an inclusive blockchain for anyone. The monopolization in the block construction process reduces resistance to censorship. Therefore, it is necessary to stimulate competition within the supply chain of block construction. For stimulating competition, we believe it is important that searchers or builders can obtain order flow (OF) under the same conditions. Reducing EOF so that all searchers can equally obtain OF from the originators, and setting up an environment where searchers can send their bundles to a wide variety of builders is crucial. The scope of this product is to prevent the EOFization of orders originating from contract wallets that comply with ERC-4337 and DApps utilizing them. Rights to First Arbitrage Auction --------------------------------- ### The Subject of the Auction In CASTY, we conduct auctions for the _right to first arbitrage_ of a DApp. The right to first arbitrage is the privilege to execute bundles before other orders in each block. The auction winner can execute their bundle before any other order that operates a DApp during the corresponding block. The rights to first arbitrage are mainly bid on and utilized by searchers who are able to formulate MEV strategies. ### The Flow of the Auction The flow of the auction for the rights to first arbitrage of the `X`th block is as follows: * The auction starts at the `X-m`th block * Bids for the auction are accepted over a period of `n` block. * At the end of the auction period, the person who made the highest bid becomes the winner. The winner of the auction exercises their right by letting include a bundle in the block, such as delegating the bundle to block builders, at the timing of the construction of the `X`th block. The auctions are held continuously for each block. ### Distribution of Auction Profits The profits from the auction are distributed to DApp providers. The distributed profits will be returned to the end users, for example, by redistribution from DApp providers, or by providing excellent experiences for free. ### Architecture The unique feature of CASTY is that it utilizes smart contracts for conducting auctions and exercising rights. This means that the auction mechanism operates trustlessly, and all proposers, builders, and competing parties are bound to adhere to the processes and results of the auction. This significantly reduces the cost for a searcher to trust a builder. Since the likelihood of inclusion increases by sending a bundle to many builders\[\], searchers are motivated to send bundles to a variety of builders. ![](https://storage.googleapis.com/papyrus_images/8fbe0b82904df44c6ed445236b323884841c610738333f0a67e6a95b0eb11446.png) The basic interface of CASTY is common to ERC-4337. The difference is that the Entry Point contract calls the auction contract during the Verification loop it executes. The auction contract holds information about whether the auction winner's bundle has been executed, and allows other userOps to execute only when the auction winner's bundle has been executed. UserOp Broadcast Network ------------------------ DApps adapting CASTY send orders through nodes operated by CASTY and broadcast them to the gossip network that searchers connect to. This network is compatible with the basic ERC-4337 public mempool. ![](https://storage.googleapis.com/papyrus_images/185e9e333c51a55059a6c04f27c27b5b9c4e9aba5043b6299a807242a53dc0ef.png) CASTY's nodes work for efficient delivery of orders to searchers. It can be replaced or operated concurrently by DApp providers or third parties. Therefore, the existence of CASTY's nodes does not create a single point of failure in the system. DApp providers that adapt CASTY have an incentive to reach orders to many searchers avoiding EOFization. The more orders reach searchers, the fiercer the competition between searchers, resulting in more efficient MEV extraction. Consequently, the value of the right to first arbitrage increases, and the profits returned to DApps increase as well. When DApp providers can expect the profits generated by CASTY to be greater than the PFOF paid by builders, they will choose to send orders to the public mempool rather than sending them privately. --- *Originally published on [askyv](https://paragraph.com/@askyv/casty-mev-capturing-aa)*