Ethereum Aims to Shield Users from Trading Bots with Mempool Encryption

Ethereum is exploring ways to protect users from predatory trading bots that exploit pending transactions in the public mempool.

The problem arises because Ethereum's transparent waiting room allows automated traders to spot profitable orders and place their own transactions around them, extracting value from users before a trade settles.

This practice has become associated with 'sandwich attacks,' where a bot spots a pending swap, buys the same asset first to move the price against the user, then sells immediately after the victim's trade executes at a worse price.

Developers are now considering encrypting the mempool to remove the informational advantage that makes these attacks possible. A proposal known as LUCID (EIP-8184) would require block builders to commit to sealed transactions containing an encrypted payload without knowing what the transaction does.