Citation

Öz, B., Schlegel, C., Mamageishvili, A. “Just-in-Time Resale in an Ahead-of-Time Auction: An Event Study.” Flashbots / Offchain Labs. arXiv:2603.20175v1 [cs.GT] (Mar 20, 2026).

What Happened with Timeboost

Arbitrum’s Timeboost sells ahead-of-time ordering priority (the right to have transactions boosted ahead of others). Major users — Wintermute and Selini Capital — subsequently adopted Kairos, a just-in-time secondary market system.

This paper is an event study of what happened to the primary Timeboost auction after the JIT secondary market (Kairos) emerged.

Key Finding: Primary Auction Collapsed

After Kairos adoption:

MetricPre-Kairos eraPost-Kairos era
Bids as % of highest bid~62.7%14.8%
Bidding behaviorReflects actual CEX-DEX volatilityDecoupled from volatility

Post-Kairos, demand for timeboosting still exists (CEX-DEX arbitrage demand still responds to price volatility). But observed bids in the primary Timeboost auction no longer reflect this demand.

Interpretation: Kairos captures the JIT resale surplus. The primary auction becomes a de facto fixed cost; the real competition happens in Kairos’s secondary market. Arbitrum (the primary auctioneer) loses the surplus to the Kairos mechanism.

Mechanism: Why the Primary Auction Collapsed

Classic secondary market dynamic:

  1. Buyers in the primary auction know they can resell in Kairos
  2. They therefore bid below their true value (planning to profit from resale)
  3. The primary auction receives low bids even when underlying value is high
  4. Primary auctioneer (Arbitrum) captures only ~14.8% of value instead of ~62.7%

This is a known problem in ahead-of-time auctions — predicted by theory, now confirmed empirically.

Implications

For Arbitrum

  • Primary auction “effectively ceases to function as a meaningful surplus extraction mechanism”
  • Total PnL (gross of auction payments) remains similar across regimes → the value is there, just not captured by Arbitrum
  • Recommended fixes: modify auction design to reduce primary-secondary gap; dynamic reserve price

For Protocol Design Generally

  • Ahead-of-time auctions are vulnerable to JIT secondary markets: any mechanism that sells rights in advance creates resale opportunities
  • PBS MEV-Boost currently avoids this partly because the commitment period is very short (one slot ahead)
  • Longer-horizon ahead-of-time auctions (e.g., slot auctions for multiple future blocks) would face this problem

For ePBS and Outcome Preconfs

  • Preconf systems that sell ordering rights ahead of slot start face the same secondary market risk
  • Design of preconf systems must account for potential Kairos-style JIT resale

Connection to Wiki

This paper provides empirical validation for the MEV Auction Design: Open vs. Sealed, Timeboost, and Kairos claim that “Timeboost fell from 63% to 15% protocol capture.” The 63% → 15% figure (slightly different from the 62.7% → 14.8% here) is confirmed, with mechanism explanation.