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Becoming Immutable: How Ethereum is Made

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  • Andrea Canidio
  • Vabuk Pahari

Abstract

Blockchain's economic value lies in enabling financial and economic transactions that do not require trusted, centralized intermediaries. In practice, however, transactions must pass through several intermediaries before being included on-chain. We study empirically whether this process undermines blockchain's stated benefits by assembling a novel dataset of 15,097 non-winning Ethereum blocks--blocks proposed by builders but not ultimately selected for inclusion. We show that 21% of user transactions are delayed: although proposed in some candidate blocks, they are not included in the winning block. Approximately 30% of these delayed transactions are exclusive to a single losing builder, indicating that transaction routing materially affect inclusion outcomes. We further document substantial heterogeneity in execution quality: both the probability of successful execution and the execution price of users' swaps vary across candidate blocks. Finally, we study two arbitrage bots trading between decentralized (DEX) and centralized exchanges (CEX). We document intense competition for the same arbitrage opportunities and estimate that these bots trade USDC/WETH and USDT/WETH on centralized exchanges at prices approximately 2.8 basis points more favorable than contemporaneous Binance prices.

Suggested Citation

  • Andrea Canidio & Vabuk Pahari, 2025. "Becoming Immutable: How Ethereum is Made," Papers 2506.04940, arXiv.org, revised Dec 2025.
    • Handle: RePEc:arx:papers:2506.04940
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    File URL: http://arxiv.org/pdf/2506.04940
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    References listed on IDEAS

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    1. John, Kose & Monnot, Barnabé & Mueller, Peter & Saleh, Fahad & Schwarz-Schilling, Caspar, 2025. "Economics of Ethereum," Journal of Corporate Finance, Elsevier, vol. 91(C).
    2. Paul Janicot & Alex Vinyas, 2025. "Private MEV Protection RPCs: Benchmark Stud," Papers 2505.19708, arXiv.org.
    3. Maryam Bahrani & Pranav Garimidi & Tim Roughgarden, 2024. "Centralization in Block Building and Proposer-Builder Separation," Papers 2401.12120, arXiv.org.
    4. Robin Fritsch & Andrea Canidio, 2024. "Measuring Arbitrage Losses and Profitability of AMM Liquidity," Papers 2404.05803, arXiv.org, revised Apr 2024.
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    Cited by:

    1. Vabuk Pahari & Andrea Canidio, 2025. "How Exclusive are Ethereum Transactions? Evidence from non-winning blocks," Papers 2509.16052, arXiv.org, revised Nov 2025.
    2. Fei Wu & Danning Sui & Thomas Thiery & Mallesh Pai, 2025. "Measuring CEX-DEX Extracted Value and Searcher Profitability: The Darkest of the MEV Dark Forest," Papers 2507.13023, arXiv.org, revised Aug 2025.

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