TL;DR:The overarching goal of this grant is to propose to Optimism DAO to evaluate (and at a later stage implement) how to implement front-running and censorship protection via a shielded/encrypted mempool by threshold encrypting transactions until they’re signed by the sequencer.
The problem we’re aiming to solve:Front-running and censorship are huge threats to the base layer neutrality of Ethereum and the L2 ecosystems. One specific problem this creates is that especially larger crypto investors, who are aware of front-running, are keeping billions of dollars side-lined from DeFi because they know that they’ll get front-run.
Solution:We propose to add a shielded mempool using threshold encryption to the OP Stack. One way to achieve this would be an implementation of the threshold encryption DKG as implemented by Shutter Network for Optimism, adding another module and more optionality for beneficiaries of the OP stack.
Benefits for builders on top of OP stack and their end users:With a shielded mempool, we’re expecting the following benefits, especially for DEXs and DEFI protocols and their end users of Optimism based rollups: a higher degree of base layer neutrality leading to a) better and fairer prices on DEXs and DeFi protocols on Optimism due to front-running protection and b) an additional censorship resistance layer.For sequencers in the OP stack ecosystem, the added neutrality should result in better plausible deniability against anyone arguing that the sequencer role isn’t neutral, i.e., end users or even regulators.
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