Ordinals Sniping Part 2: Revenge of the Marketplaces kicks off this week as two marketplaces — MagicEden and Mintify — launch mempool sniping countermeasures.
If you aren’t already familiar, Bitcoin power users have been “sniping” ordinal trades on exchanges when transactions are mid-flight and waiting in Bitcoin’s public mempool. To accomplish this, hijack an ordinal sale’s partially signed bitcoin transaction and insert their own payment and address to supplant the original sale. They then resell the ordinals back on the secondary market (see our previous writeup).
But the jig is up this week! Popular marketplace Magic Eden is rolling out an ordinals “sniping prevention” scheme, and newcomer marketplace, Mintify, is launching a private mempool product. Is this where the market finally exacts its revenge?
Let’s review the different mitigation strategies.
Mintify delivers the first private mempool marketplace integration
While I personally had my money on Magic Eden to get the first direct pool partnership, Mintify takes the initial lead via pool deals. Last week, Mintify announced stealth transactions, guaranteeing to “block out snipers” with “complete privacy.” Monday morning on the Ordinal Show, Mintify CEO Evan Varsamis confirmed that it was, in fact, a direct deal with a mining pool to create a private mempool for transactions from their marketplace.
What exactly is a private mempool?
Mining pools typically produce transactions that are publicly broadcasted through the bitcoin node gossip network. However, it is possible to just hand a transaction directly to a pool instead of broadcasting it publicly (where everyone, including mempool snipers, can see it). The pool promises to only include that transaction whenever it finds a block – the transaction is never broadcast publicly beforehand. This is how Mintify is guaranteeing private “stealth” transactions.
This is significant because to our knowledge there has not been a private mempool at scale outside of Marathon’s Slipstream, which has entailed more of an over-the-counter process rather than the fully integrated API that Mintify appears to be running. I consider it somewhat of a watershed moment for there to be an active relationship between a mining pool and marketplace.
Private mempools have some drawbacks for degens
The catch is that stealth transactions via this private mempool only work whenever the partnered pool finds a block. In degen language, that means that your transaction could be really slow and the timeline unpredictable. Mintify estimates a “2-6 hours” window and charges a markup of 250% on the transaction fees.
Doing some back of the napkin math on Mintify’s transaction confirmation estimate, this suggests that Minitfy could only be partnered with a handful of pools – Luxor, Marathon, or Spiderpool. Given that the transaction fee market up is exactly 250%, which lines up precisely with Slipstream’s 250% markup, this strongly suggests that once again that MARA Pool, which has been providing boutique, private mempool services since February of this year, is graduating to partnerships for automated mempool services.
Magic Eden’s plan to stop ordinals sniping
MagicEden is really leaning into Bitcoin this week and rolling out a lot of features focused on the on-chain Bitcoin economy. The highlight of the week for the marketplace is definitely its Sniping Protection feature. This feature relies on additional signatures and more coordination by the marketplace rather than a direct pool partnership. The exact scheme isn’t clear yet, but I suspect that it probably looks something like lifofifo’s proposal from last spring:
MagicEden’s solution likely produces three transactions: one for the seller, one for the buyer, and one to unify the two. Essentially, the marketplace adds a few more steps and coordination to the buyer and seller exchange, making it impossible for snipers to replace-by-fee that specific transaction. It means an extra signature or two for the buyer, but it also probably guarantees that the purchase will go through as intended.
What happens next for ordinals sniping?
It’s difficult to say where all of this goes, but the competition has heated up.
In the short term, though, the marketplaces which do not have similar sniping protections as MagicEden will still be subject to RBF-sniping. We may see Mintify’s private mempool deal find niche product market fit for high-value exchanges whose buyers don’t want to be sniped instead of regular ordinals marketplace exchanges.
On a longer timeline, this signifies a major evolution of the sniping landscape: the initial mitigation responses. However, Ordinals Sniping has a 3.0 and 4.0 game theory ahead of it that I might tease here: the next stage of the game becomes canceling buys with strategic coin control. Then the private order flow games pick up – selling transaction dealflow like Mintify, but on steroids (much like Solana currently operates today). And finally, the pools stage: datacenter and block producer coordination with spy mining paranoia games.
