Encrypted Mempools and Funding Manipulation in Perpetual Futures

Summary

The document examines how encrypted commit-then-reveal transaction systems may leave perpetual futures funding signals exposed to self-authored state manipulation. An attacker who knows its own transaction and holds a claim affected by the changed state can benefit from manipulating inputs to the funding calculation. Since funding transfers depend on both a rate signal and receiving-side open interest, delayed disclosure can affect the economic outcome even when cryptographic processing itself is fast.

The proposed analysis models correction as arbitrage: traders choose how much to trade based on price impact and inventory costs. It argues that a transaction ordering barrier prevents ordinary adaptive searchers from responding during the committed stage, so correction can lag what would be possible after reveal. The paper also identifies reduced price capitalization of predictable funding as a separate amplification channel and proposes a local security index that distinguishes attacker blindness from correction and capitalization shielding. The supplied text gives theoretical mechanisms, but no empirical estimates or quantified case studies.

Key ideas

• Perpetual funding can be manipulated through self-authored transactions when an attacker has an economic claim tied to the affected state.
• Commit-then-reveal ordering can prevent adaptive arbitrageurs from correcting manipulation during the closed stage.
• Correction depends on traders’ price impact and inventory costs, as well as when protocol information becomes available.
• Transaction privacy may amplify funding distortions by weakening the incorporation of predictable funding into entry prices.
• The proposed security index separates attacker blindness, correction shielding, and capitalization shielding.

Tags

# Reveal, Correct, Then Pay: Encrypted Mempools and Perpetual Funding Security


# Reveal, Correct, Then Pay: Encrypted Mempools and Perpetual Funding Security









Encrypted mempools are designed to hide transaction contents until execution order is fixed, preventing many victim dependent forms of maximal extractable value. This paper studies a different class of attack in the form of self-authored state manipulation, in which the attacker knows its own transaction and owns a downstream claim on the state that transaction changes. Perpetual futures funding is a canonical example. The funding signal determines a transfer rate, while receiving side open interest is the transfer base. In a commit then reveal mempool, an adaptive corrective transaction cannot enter the already committed batch. Privacy can therefore create an economic reaction gap even when cryptographic decryption overhead is negligible. We microfound correction through executable arbitrage opportunities. Correctors choose order size against local price impact and inventory cost, while the protocol information schedule determines which opportunities are actionable. The ordering barrier removes ordinary adaptive searchers from the closed stage. It therefore yields a closed stage correction rate below the adaptive correction rate whenever positive adaptive capacity becomes available after reveal. The distortion entering a funding window is multiplied by an explicit response factor. Transaction privacy can also reduce capitalization of predictable funding into entry prices, producing a second amplification channel. The resulting local security index separates attacker blindness, correction shielding, and capitalization shielding.

Shown in full with attribution under the source's licence. Licence: abstract CC0

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.