Determine Surplus Distribution Between Searchers and Kairos in the Timeboost Resale Market

Determine the exact distribution of the additional value generated by time-boosted transactions between the CEX–DEX arbitrage searchers Wintermute and Selini and the reseller Kairos within Arbitrum’s Timeboost ecosystem after the adoption of the Kairos just-in-time resale market, quantifying how much surplus is retained by the searchers versus captured by Kairos given that many payments to Kairos occur off-chain via its subscription-based parallel lane and are not observable on-chain.

Background

The paper studies how the emergence of Kairos—a just-in-time resale market for Arbitrum’s Timeboost fast-lane—changed competition and surplus capture in the primary ahead-of-time auction. After Wintermute and Selini began sourcing fast-lane access through Kairos in mid-February 2026, Arbitrum’s auction revenue declined markedly while total CEX–DEX arbitrage profit remained similar, indicating a redistribution of surplus away from the primary auctioneer.

A key empirical difficulty is that a substantial part of Kairos’s business for CEX–DEX arbitrage operates via a parallel lane with off-chain, subscription-based payments, which are not visible on-chain. As a result, although evidence suggests the secondary market captures a significant portion of value, the precise allocation of this value between the searchers and Kairos cannot be inferred from on-chain data alone, leaving the distribution of surplus unresolved.