On-Chain Microstructure

What you'll learn

• Why Microstructure Is Different On-Chain
• Block Time: The Heartbeat of Every Venue
• Mempool Dynamics: Public vs Private
• MEV Exposures: Sandwich, Frontrun, Backrun
• Inclusion Latency vs Settlement Finality
• Putting It Together: A Realistic Execution Cost Model

Key terms

Block time

The average interval between consecutive blocks on a blockchain. Sets a floor on transaction confirmation latency. Ethereum 12s, Solana ~400ms, Base 2s, Arbitrum ~250ms batched.

Mempool

The staging area where pending transactions wait to be included in a block. On EVM chains the default mempool is public and any participant can observe pending orders.

Private RPC

An endpoint that routes transactions directly to block builders without first broadcasting to the public mempool. Examples: Flashbots Protect, MEV-Blocker. Removes most sandwich exposure.

MEV (Maximal Extractable Value)

Value extractable by block producers and searchers through reordering, insertion, or censorship of transactions. Shows up to traders as sandwich attacks, frontrunning, and backrunning.

Sandwich attack

A common MEV extraction where a searcher buys before your AMM swap, lets your trade move price, and sells immediately after. Profits from your slippage.

Inclusion latency

The time between transaction submission and inclusion in a block. The relevant metric for execution speed.

Settlement finality

The point at which a transaction is irreversible. Differs from inclusion: Ethereum L1 finalizes in ~12-15 min, optimistic rollups have a 7-day L1 challenge window.

Sequencer

The component (typically centralized at launch) on an L2 that orders transactions before posting them to L1. Sub-second soft confirmations from the sequencer are usually treated as final for trading.

Commitment level (Solana)

Solana commitment tiers: processed (next slot), confirmed (typical trading), finalized (~12-13s, 32 slots, used for high-value transfers).

Reorg risk

The probability that an included transaction is reverted via chain reorganization before achieving finality. Real on probabilistic-finality chains and during sequencer disruptions on L2s.